The use of incomes policies: The case of Iceland, 1969-1994

• Main Author: Oskarsdottir, Stefania
• Other Authors: Wilson, Frank L.
• Format: Text
• Language: English
• Published: Purdue University 1995
• Subjects: Political science|European history; Krona; Iceland
• Online Access: https://docs.lib.purdue.edu/dissertations/AAI9622752

The focus of this dissertation is Icelandic incomes policies. The analysis of Icelandic incomes policies between 1969 and 1994 shows that for most of this period the relationship between labor, capital, and the state has remained conflictual. Until 1990 governments relied mostly on enforced incomes policies to control inflation and to maintain full employment. The compulsory approach in regard to wage policy consisted mainly of reducing or banning outright indexed wage compensations, devaluations of the krona, and the frequent prohibitions of strikes and collective bargaining. In regard to price policy, the compulsory approach consisted mainly of price freezes, regulations or supervision of price increases, and the use of agricultural subsidies to lower the cost of living. It is shown in this dissertation how prior to 1990 institutionalized practices undermined the success of consensual incomes policies in Iceland. Governments relied on compulsory incomes policies to achieve the goal of restraint on both wage and price increases. The conflictual dynamic that has characterized Icelandic industrial relations is highlighted. This conflictual dynamic in turn shaped decisions that affected the trajectory of future developments. The dissertation shows how institutional practices tend to be locked in. During the period studied, the same repertoire of policy measures were repeatedly used, even though some other measures might have proven more effective in limiting inflationary pressures. Since 1990 compulsory incomes polices have been replaced by consensual incomes polices. The reasons for this change are examined in the dissertation. Apart from analyzing Icelandic incomes polices in their national setting, Icelandic incomes policies are also put into the context of the literature with the aim of drawing attention to the insights the Icelandic case offers on state-society relations.