Labour Market and Trade Unions

The Icelandic labour market is from a regulatory point of view usually characterized as flexible as compared to the labour markets on mainland Europe. The workforce is considered adaptable due both to varied skills and high level of education to new demands brought on by changes in the marketplace for products and services, introduction of new technologies and other factors. Labour participation is also very high for both genders.

The legislative framework for the general labour market is in Act No. 80/1938 and in Act No. 55/1980. The labour market is for the most part regulated by means of collective bargaining. The social partners play therefore an important role in setting wages in different sectors of the economy, working time arrangements and various employment rights of workers. Wages and other terms of employment concluded in collective agreements are by law minimum terms, applying to all workers in the applicable occupation within the geographical area covered by each agreement. Minimum terms set by collective agreements do not stand in the way of higher wages and/or better terms negotiated between workers and their employers, if the economic situation in the relevant sector warrants it. 

Labour law enacted by the Parliament supports this system by providing the social partners with a legal framework which deals with certain aspects of collective bargaining, the right to strike and dispute resolution. In addition there are a number of employment laws in areas such as equal rights of men and women, pensions, maternity and paternal leave and health and safety at the workplace. The Constitution of the Republic of Iceland requires that everyone shall be equal before the law and enjoy human rights irrespective of sex, religion, opinion, national origin, race, colour, property, birth or other status. 

Iceland is a member of the European Economic Area (EEA) which unites the EU Member States and the three EFTA States (Iceland, Liechtenstein and Norway) into one Single Market governed by the same basic rules in the area of free movement of goods, capital, services and persons. Iceland is also a member of various international organizations such as the International Labour Organization (ILO), the World Trade Organization (WTO) and the Organization for Economic Co-operation and Development (OECD).

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