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
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Reaction to 2008 Crisis
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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
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Tradition for Tripartate
Agreements
Samtök atvinnulífsins
• Unsuccessful attempts to subdue inflation in the
1980‘s
• „National Pact“ 1990
www.sa.is
– 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
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Pension Funds
Samtök atvinnulífsins
• 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
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Education
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Samtök atvinnulífsins
• 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.
Rehabilitation
Samtök atvinnulífsins
• 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
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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
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Samtök atvinnulífsins
• SA/ASÍ criticised delivery of services to unemployed
• 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
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New Tripartate Agreements
Samtök atvinnulífsins
• 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
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New Tripartate Agreements
– 14 page document – product of 6 months of negotiations
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www.sa.is
• 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
• Declaration of the government attached to
collective agreements 5 May 2011
Assessment
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Samtök atvinnulífsins
• 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
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Main characteristics of the labour
market in Iceland
– women, older workers, students
– 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
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www.sa.is
• 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
Samtök atvinnulífsins
• High participation in the labour force
• High employment rate
Total labour force as % population, 2010
70
Males
56.4
Samtök atvinnulífsins
60
Females
59.5
54.3
50
50.1
40
30
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20
10
0
Source: OECD.stat
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Employment rate, Aged 15-64. 2011.
90
80
80
77 77
73
Males
Females
73
60
57
70
Samtök atvinnulífsins
70
59
50
40
30
www.sa.is
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10
0
Source: OECD Stat
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Employment rate, Aged 15-74. 2011.
80
77
72
70
Males
71
Females
67
Samtök atvinnulífsins
63
60
52
50
40
30
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10
0
Source: OECD.stat
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Average year of age at labour force exit, 2010
75
Men
69.7
65.4
65
Samtök atvinnulífsins
70
Women
64.7
64.5
63.9
62.4
60
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55
50
Source: OECD - Pensions at a Glance
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Average annual hours actually worked per worker, 2011
2,500
Samtök atvinnulífsins
2,000
1,776
1,500
1,732
1,426
1,000
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500
0
Source: OECD.stat
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Hours worked per week of full-time employment, 2008
60
Samtök atvinnulífsins
50
46.1
41.8
39.2
40
30
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10
0
Source: Eurostat
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Key figures on the labour
market in 2nd quarter 2012
Unemployment rate
Male
Female All persons
17
19
18
5
5
5
5
4
4
7
7
7
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Full time
Part time
All persons
Working hours
Male
Female All persons
47
41
44
26
24
24
44
35
40
Samtök atvinnulífsins
16-24
25-54
55-74
All persons
Employment rate
Male
Female All persons
85
85
85
92
89
91
69
60
64
85
81
83
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Compensated absence from work due to illness
Number of days lost per person per year
20
16
14
17
Samtök atvinnulífsins
18
19
16
14
12
12
10
8
11
11
11
10
10
3,5% of working days
9
8
8
8
8
7
6
4
3
2
0
Source: OECD.stat
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www.sa.is
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Total number of disabled people in Iceland
16,000
15,197
14,000
13,230
14,507
2009
2010
Samtök atvinnulífsins
14,103
14,714
13,616
12,755
12,011
12,000
11,199
10,443
9,780
10,000
9,329
8,673
8,000
7,776
7,980
1996
1997
1998
www.sa.is
7,577
6,000
4,000
2,000
0
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2011
Source: Social Insurance Administration
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New entrants into the ranks of the disabled
1,600
1.474
1.343
1.291
1.301
1.176
1,200
Samtök atvinnulífsins
1,400
1.182
1.165
1.105
803
1,000
760
737
767
695
800
663
652
611
www.sa.is
600
400
583
671
524
481
513
2005
2006
2007
200
564
519
494
2010
2011
0
2004
Men
2008
Women
2009
Source: Social Insurance Administration
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