Words by

Gabríel Benjamin and Andie Sophia Fontaine

How the service industry exploits workers, and why nothing is changing

Earlier this month, a news story broke in the Icelandic media that a young Icelandic woman working at Lebowski Bar was fired after she asked to be paid minimum wage—effectively a pay rise over what she was getting. The story sparked shock and outrage amongst many. To others, it was merely par for the course.

Restaurants, bars and clubs in Iceland are notorious for the use of what is known as jafnaðarkaup (“median pay”)—a form of wage offsetting. By most collective bargaining agreements in the service industry, a worker is supposed to receive a base hourly wage, plus an extra percentage for working evenings, nights, weekends and holidays. Jafnaðarkaup, on the other hand, sets one hourly wage for any and all shifts an employee works. An employer will tell an unsuspecting employee—almost always a foreigner or a young Icelander—that it all averages out in the end. Every labour and immigrant rights official the Grapevine spoke to unequivocally agrees that it is actually exploitative—as well as widespread, and seemingly unstoppable.

“It is our opinion that people working in the hospitality industry shouldn’t generally have jafnaðarkaup,” Sigurður Bessason, chair of the trade union Efling, tells us. “We believe that wage agreements should be honoured, but the problem with jafnaðarkaup is that it can be fine if you always work similar shifts, and the day and night shifts are itemised on the pay slip. The problem with it is that if you have irregular shifts, where you’ll sometimes work evenings and sometimes days, then jafnaðarlaun doesn’t mean anything to you.”

Hjalti Tómasson, a caseworker for the trade union Báran, expresses his misgivings more bluntly. “Jafnaðarkaup is an ugly term that keeps popping up, which in most instances involves the employees being short-changed, that’s just the way it is,” he says. “I do emphasise that this isn’t true of all employers, many of them have everything in order and pay the correct wages, but they then complain about other companies getting a competitive advantage. Most of the jobs involved aren’t well paid, which makes it even more horrible when staff is paid less than they are due.”

Immigrant workers are vulnerable

Numerous Grapevine readers, upon seeing the Lebowski Bar story, commented that this was commonplace in the service industry, especially amongst immigrant workers. Some of them shared stories about being cheated out of their wages. One reader, commenting on the story, wrote: “I’m also very sad that an Icelander got an article if this happens, but [there is] nothing about places where the boss is cheating and make[s] foreigners work without any [payslips] or fair salary.”

But Sigurður contends this has less to do with the nationality of the workers than the industry itself. “I think it’s more a matter of the industry, which has more immigrant workers,” he says. “We get immigrants and locals alike. Generally speaking, I’ve felt that immigrant workers know their rights as well as Icelanders. They may take some time to adjust, but the important thing is for them to first know where to turn for help.”

Hjalti disagrees that nationality does not play a part: “It mostly applies to foreigners because Icelanders know better—it’s common knowledge to them that there are unions here, and regardless of what opinion people have of them, they know we have certain leverage.” He continues: “It’s first and foremost the foreigners that are exploited, and it is very troubling to us to hear how they are treated. There are stories that you wouldn’t believe happened in Iceland, things you only see in films; there are people that are practically imprisoned here, held hostage by their employers who they depend on for their social security number, tax card, food and lodgings—if these employees open their mouths, they are out on the street with nothing to show for it.”

Knowledge = Power

If foreigners are more likely to be subject to exploitation than Icelanders due to not knowing their rights, how should they glean this knowledge in the first place?

Immigrants to Iceland need a permit to work. This is obtained from the Directorate of Labour. While it may seem intuitive that these would be the officials to inform immigrants of their working rights, this is not the case.

“When a given work permit is issued, the applicant doesn’t receive any special information or guidance about immigrants’ labour rights,” Gísli Davíð Karlsson, who works in the Directorate’s legal department, told us. “In the circumstances that an immigrant contacts the Directorate about his labour rights, he can receive some minimal information. More extensive information or formal assistance isn’t provided by the Directorate, but those immigrants are referred to their relevant trade union or The Icelandic Confederation of Labour (ASÍ).”

ASÍ’s webpage indeed offers an English language option. However, it mostly provides general information on the union itself, rather than the “more extensive information” they might expect to find on the Directorate’s recommendation. Efling is the same story all over again—if extensive information in English on the working rights of foreigners indeed exists, it’s certainly not to be found on their English webpage.

While Sigurður informs us that the owners of Lebowski Bar have since agreed to pay their employees in accordance with the collective bargaining agreement for restaurant and bar workers, both he and Hjalti expressed a feeling of powerlessness over what they have come to view as an increase in service industry worker exploitation.

“Of course, we always try to contact the employers, and encouraging the companies to change their wage policies, but we can’t ever guarantee that they won’t make mistakes in doing so correctly,” Sigurður says.

“We’re only allowed to help those that come to us,” Hjalti offers. “People within the labour movement have tried to address these matters with companies that are repeat offenders, but going into the companies and reaching out to their employees only reveals our powerlessness.”

Where the law fails

The trade union officials believe their hands are tied due to labour law itself.

“We have no say over the judicial system, but it’s certainly the case that companies bear no responsibility for paying the correct wages, and maybe that’s something to reconsider,” according to Sigurður.

Hjalti takes much the same tack, putting responsibility squarely at the feet of government. “We have laws that dictate that people need to be paid according to the contracts in place, but they aren’t enforced, leaving companies that underpay their staff free from any consequences other than paying what they should have been paying originally,” he says. “We need legal reform. Disregarding wage agreements needs to be made not just illegal, but punishable by law.”

For now, trade unions can only address exploitation on a case-by-case basis, there is no legal recourse if an employer consistently breaks wage agreements, and information on what those agreements even are can prove, at best, difficult to find (especially for the average immigrant in Iceland). Workers brave enough to contact to seek the resources they need and organise can be provided with the tools they need to take control of their workplaces, but to do that, they need to know what their rights are in the first place. So far, there appears to be little willingness from relevant officials to get that information into the hands that need it most.

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See Also:

So What’s This Unfair Treatment Of Young Employees I Keep Hearing About?