Central Bank of Iceland Concerned over Pay Raises

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Central Bank of Iceland Concerned over Pay Raises

Governor of the Central Bank of Iceland Már Guðmundsson stated on Monday that it is important that salary increases such as the ones included in a recent wage contract with nurses at Landspítali National University Hospital do not spread to other professions.

centralbank_ipa

The Central Bank of Iceland. Photo copyright Icelandic Photo Agency.

Már reasoned that if the move were to cause similar developments on the entire labor market, it would fuel the inflation and the Central Bank’s Monetary Policy Committee would be bound to react by raising interests, ruv.is reports.

“There are of course examples from the past of single group obtaining pay raises above others,” Már stated, stressing the importance of the increase remaining a relative change in salaries for the respective profession, which would coincide with target inflation.

Már and the Central Bank’s chief economist expressed their concerns in a meeting with the Economic Affairs and Trade Committee of Alþingi, the Icelandic parliament, yesterday.

Click here to read more about the pay raises for nurses.

ESA