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The Icelandic Neo-corporative Model. August 2012. The Icelandic Neo-corporative Model. Post 2008 crisis development – a new life Cooperation between government and social partners Tripartate Agreements
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The Icelandic Neo-corporative Model August 2012
The Icelandic Neo-corporative Model • Post 2008 crisis development – a new life • Cooperation between government and social partners • Tripartate Agreements • Social partners deeply involved in organisation and delivery of social services on a long term basis • Pension funds • Education • Rehabilitation • Unemployment Samtök atvinnulífsins www.sa.is
Reaction to 2008 Crisis • Collapse of the financial institutions • Social upheaval • Uncertainty • SA and unions worked closely together • Elements of stability, cooperation, solidarity, vision and hope • Jobs important anchors - save as many as possible Samtök atvinnulífsins www.sa.is
Tradition for Tripartate Agreements • Unsuccessful attempts to subdue inflation in the 1980‘s • „National Pact“ 1990 • Wide ranging tripartate agreement calling for wage moderation, fixed exchange rate and strategy to break up inflationary expectations • Tripartate Agreements in early 1990‘s • Became less important • Delivery of unemployment services transfered from unions to the state 1997 Samtök atvinnulífsins www.sa.is
Pension Funds • Landmark tripartate agreement in 1969 • Pension Funds established to provide universal coverage for the labour market • Funded system – Defined contributions • Jointly operated by SA and unions. • 1997 legislation is now the legal basis • SA/ASI funds have approx. 50% market share. • Pension funds assets are 137% of GPD Samtök atvinnulífsins www.sa.is
Education • Employers contribute to funds for supporting continuing education that are jointly managed with the unions. • SA and the unions along with the public sector labour market partners operate a state funded institution for continuing education. The aim is ambitious. Raise the completion rate of secondary level education to 90%. Targeted on unskilled labour. • The unions operate an educational institute for unskilled labour and are involved with many others. • SA is involved with Reykjavik University and Bifröst University • Other business organisations operate two secondary level schools • Education is almost always on the agenda in rounds of negotiations. Samtök atvinnulífsins www.sa.is
Rehabilitation • New joint labour market institution „VIRK“ set up by the February 2008 collective agreement between SA/ASÍ. • Funded in the beginning by a contribution 0,13% of wages • The public sector labour market partners joined in 2009. • The objective is to fight higher disability incidence by proactive means as early as possible in the developent process from illness/accident towards total disability • Strong and efficient central office with professional control and initiative • Advisors based with the unions • Services oursourced to health experts and institutions • New legislation passed that obliges universal participation • Pension funds and the state will also contribute 0,13% each Samtök atvinnulífsins www.sa.is
Services to unemployed • SA/ASÍ criticised delivery of services to unemployed • Lack of contact with the unemployed • Ineffective services to the unemployed • Bureaucratic atmosphere • Inferior services to employers with vacancies • Ineffective employment mediation • Insufficient surveillance of cheating • Services not adquately prioritised • Cost of unemployment paid for by contribution from employers (wage tax) • Pilot project started 1 August 2012. SA/ASÍ deliver services • Jointly managed central office. Advisors at unions Samtök atvinnulífsins www.sa.is
New Tripartate Agreements • The Stability Pact: June 2009 • Motivation: Avoid opening private market collective agreements in a difficult situation and close public market agreements. • Wide scope (examples) • Taxes 45% of measures to bring down budget deficit • Facilitate investments • Bank restructuring • Corporate social responsibility • Lifting of capital controls • Address different pension fund schemes • Reduction of interest rates Samtök atvinnulífsins www.sa.is
New Tripartate Agreements • Declaration of the government attached to collective agreements 5 May 2011 • 14 page document – product of 6 months of negotiations • State finances, economic planning, monetary policy, lifting of capital controls • Social benefits, personal income tax • Unemployment contributions, wage tax, delivery of services to unemployed • Company tax legislation, shadow economy, procurement issues • Investment objectives, public and private investments, innovation • Education, project for unemployed youth • Pension schemes issues, rehabilitation, housing issues • Fisheries legislation Samtök atvinnulífsins www.sa.is
Assessment • Neo-corporatism gains ground in crisis times. Tripartate agreements have their role. • Necessary to break up the model as the crisis situation eases. • Not hinder changes and progress with too much power of social partners • Strong labour market organisations are important. They are elements of stability but also facilitate mobilisation of society • Delivery of social services by social partners is much more successful • Pension funds • Education • Rehabilitation • Services to unemployed Samtök atvinnulífsins www.sa.is
Main characteristics of the labour market in Iceland • High participation in the labour force • High employment rate • women, older workers, students • Late exit from the labour market • Annual working hours not particularly high, despite many overtime hours, due to long vacation and many special holidays • Days absent from work relatively few (difficulties in comparison) • A large increase in number of people receiving disablement benefits in the past decade • Improvements have been realised - mainly increased services to potential new entrants • but a lot remains to be done to slow and reverse the process – especially changes in laws and regulations regarding eligibility to the entitlements • there are strong financial incitaments, especially for single mothers Samtök atvinnulífsins www.sa.is
Key figures on the labour market in 2nd quarter 2012 Samtök atvinnulífsins www.sa.is
