Árni Páll Árnason: "a working life for all"

"We must make it more acceptable that more people contribute to working life, and that they contribute to whatever extent they can. If we help just one person with a physical handicap, or just one outsider to get back into working life it will be of great benefit to society as a whole. It is quite incredible," says Iceland's Minister of Labour Árni Páll Árnason.

Iceland chairs the Nordic Council of Ministers this year, so Mr Árnason played host to his Nordic colleagues during the annual ministers' meeting in Reykjavik between 10 and 11 November. The meeting allows Nordic colleagues to exchange experiences and to update each other on developments, new reforms and initiatives in their respective countries. 

The Icelandic presidency has focused on people of working age who have fallen outside working life. The ministers' main focus was the young unemployed. Over the past year Iceland has experienced a rise in unemployment from 1.8 percent to nearly 10 percent, throwing the country headfirst into a completely new situation. Árni Páll Árnason, who is new in his post as labour minister, is keen to listen and learn from his Nordic colleagues' experiences. 

The minsters' meeting is structured, but the evening offers the chance of more informal chatting. Árni Páll Árnason hosts a dinner at the Reykjavik Culture House. The dinner table is framed by glass displays featuring Icelandic family sagas, Snorri's saga and other writings, providing a historic background to the Nordic community. A large children's choir performs from one end of the room and touches the gathering with their beautiful Icelandic songs. The choir has won several international competitions and is of very high quality. Árni Páll Árnason used to be a member when he was growing up here. Tonight he joins in with the song. He is by no means a show-off, but creates a bit of extra atmosphere by lowering his guard in this way.

The minsters' meeting over and his colleagues left, Árni Páll Árnason reflects over Iceland's situation in conversation with the Nordic Labour Journal. His full title is Minister of Labour and Social Affairs, and he is responsible for policies on working life, gender equality, social affairs and social insurance. He thinks this might help him get a better overview and understanding of how different policies connect. On the other hand:

"I think all the ministers here understand this problem," he says, referring to the cost of having people fall outside the labour market. He uses a football analogy.

No good having only professional players

"We need to decide whether our labour market should be like a football pitch where only the professionals are allowed to play, while the rest of us must stand on the sidelines and watch - or whether we want a pitch were everyone is a player. I cannot understand how it can be sustainable to have a labour market only for the professional players. That's old- fashioned thinking," he says.

"People evolve. Our ability to work isn't constant. Look at young people. They have little ability to work when they enter the labour market, but change with experience. The same goes for people with various forms of handicaps."

So how to you square the increasing demands for productivity and competition with a more open labour market?

"Human resources that are left unused are an economic drain on society," he says.

"We must recognise the costs in a better way than we do to day, and reward those who help build a socially responsible employment policy."

Árni Páll Árnason believes in economic incentives and uses Sweden as an example. Swedish businesses get reduced employer tax if they hire someone who has been outside working life for a long time. He believes that is a solution which benefits everybody.

Activity requirements

The Minister of Labour and Social Affairs is a proponent of activity requirements. He views passivity as a great danger for all; the individual who remains outside the labour market, the companies that need manpower and for society as a whole which must face the costs. All who can contribute should contribute. Rather than paying unemployment benefits straight into the pockets of young people, he wants to withhold some of that money as an incentive for getting active, while offering young people something to do. 

"We've already made the mistake of simply paying out money, which has done nothing good. We can now see how we have turned people with handicaps into social outsiders, and this system will pull them further down. The same goes for the unemployed. If you get the same amount of money for doing nothing and doing something, it is no longer sustainable. 

Is this something you have discussed with the partners to the labour market?

"We're not quite there yet. I am simply bandying ideas about which I think we can work more on after this meeting."

Critics claim it is too easy to claim disability benefits in Iceland? That there is a slippery slope from unemployment via disability benefit to becoming an outsider to the labour market?

"The critics are right. We need to prolong the period you can claim rehabilitation benefits and change the system we use to decide whether someone is unable to work. It's an old-fashioned system which purely focuses on what people can't do, rather than what people can manage. We need to make it harder to claim the benefits, without reducing their size," he says. 

"The disability benefit is slightly higher than the unemployment benefit, because it is meant to be permanent. Our unemployment benefit is the same as the minimum wage, so no cuts are possible there either. 

Crisis and bitterness

Has the economic crisis had an impact on Icelanders' mentality?

"Yes," he says. He believes Icelanders have lost some of their belief in the system and politicians, and he thinks that is a good thing.

"Icelanders have been too trusting of politicians and civil servants. For me the change means the distance between the people and politicians has grown smaller. This increases the pressure, but I believe it is necessary. People are more direct in their questioning of politicians, and they demand an answer."

Are people bitter?

"There is some bitterness in society, for sure. Especially toward businessmen who acted irresponsibly. But I think most of the blame must lie with the 2003 to 2007 government. Nowhere else in the world can you identify a government which has been ideologically opposed to the regulation of the finance market, and which granted irresponsible and unsustainable tax cuts while weakening the budget to such an extent that our economy could not tolerate a single normal year. 

Rebuilding

Iceland has an active tripartite cooperation, and the parties to the labour market now wants to use the country's pension fund to kick start business in for instance the building industry. What is your view on that?

"We agree with the parties that it is important to use what we have got, including the pension fund, to get businesses going again. The pension fund is constantly being topped up, and that money must be used for something. You could invest the money abroad, or you could use it for sustainable business in this country. I underline the word sustainable, because we are not willing to use the pension fund to prop up the economy during the crisis in order to avoid necessary spending cuts. We have no plans to buy our way out of necessary budgetary discipline. We must solve the problems we have created. It means we are short of one in every five kroner. This 20 percent budget hole must be closed within three years."

When do you think the crisis will be over?

"I think we will see lower unemployment figures next summer. I hope we can improve the situation for the long-term unemployed, that is our aim. But I think the problems will stay with us for a long time. I also don't believe we will every see unemployment figures of 1.8 percent, like we saw last year. That was not sustainable. They were based on the situation we were in which in the end created the crisis."

Iceland's EU opportunity

Árni Páll Árnason views EU membership as a big opportunity for Iceland. The process is already well under way. 

"We have answered all the 7000 questions from the Commission. We did that in six weeks. The Commission will now evaluate our answers and word is it's going fine. We hope our application can be accepted by the heads of states and governments in December, and that we can begin membership negotiations in January. We are ready. We have done all that we can do to prepare for this. The foreign ministry has already set up a negotiation committee which will represent the various interests and political standpoints. It is now important for us to continue this process in an open and transparent manner."

How do you see EU membership in the light of your desires for a more open and including labour market?

"The alternatives to EU membership is an increasingly one-sided and limited labour market where we must build our economic future on fish and aluminium and other male-dominated industries. If we want a sustainable economy and a varied business market in the future, membership is the way to go.

"I have spent these past days talking quite a lot to EU commissioner Vladimir Spidla, and we agree on the basic principles. The other Nordic countries carry even bigger ambitions for social policy within the EU. It will be a very exciting task to work towards good social policies in a future EU."

He believes the Icelandic majority no to EU membership will change when people see the result of the negotiations.