Iceland to Relax Work Permit Regulations for Foreigners Skip to content

Iceland to Relax Work Permit Regulations for Foreigners

By Yelena

Photo: Golli. Prime Minister Katrín Jakobsdóttir.

Iceland’s government will make sweeping changes to its work permit system for foreigners from outside the European Economic Area. The changes are intended to attract foreign workers from outside the EEA, including entrepreneurs, and retain students from outside the EEA who have completed studies in Iceland. The proposed changes were presented by three government ministers in a press conference yesterday.

Current system inefficient and restrictive, government says

“There is a need for a new approach for people from outside the EEA who want to move to Iceland, live, and work here,” a government press release on the initiative states. “Iceland is well behind the leading countries in international comparisons when it comes to attracting immigrants and making it possible for them to become full participants in society. The current arrangement is complicated and built on inefficient processes, decision-making within it is random as it is based on an unclear evaluation of the labour market and the restrictions for the granting of work permits are too narrow.”

In order to streamline and improve the current system, a working group proposed loosening regulations on residence and work permits, simplifying and digitising the application process for residency permits, combining residence and work permit applications, and ensuring predictability with projections of labour needs.

Permits attached to the individual, not their employer

Under the current system, foreign specialists from outside the EEA need to have a contract with an Icelandic employer in order to receive a work permit. If they lose their job, they also lose their permit to work in Iceland. The proposed system would still require non-EEA specialists to have a work contract in order to be granted a permit, but they would not lose their work permit if they stopped working for that initial employer.

Students granted three-year work permits

Students from outside the EEA who have completed studies in Iceland would also be granted a work permit for up to three years after leaving their studies. “We are educating foreign university students in our universities for our tax money, but we only allow them to be here for six months to settle in, find work, and have the possibility of some sort of work permit,” stated Áslaug Arna Sigurbjörnsdóttir, Minister of Universities, Industry, and Innovation. “We are changing this and I am especially pleased that we will extend that time to three years.” Áslaug added that this three-year permit would also be granted to entrepreneurs starting their own businesses.

In addition to increasing the opportunities for students and specialists from outside the EEA to work in Iceland, the new regulations would provide opportunities for artists and people in other fields as well. Minister of Social Affairs and Labour Guðmundur Ingi Guðbrandsson stated that the changes should help reduce social dumping and that additional analysis of the labour market will help identify where there are labour shortages.

Iceland needs foreign workers

Recent analyses have shown that Iceland will need 15,000 workers in the coming years to maintain economic stability and quality of life. Only 3,000 local residents are expected to age into the labour market during that period, meaning that the country will need some 12,000 workers from abroad to fill vacancies. Foreign workers have been a driver of economic growth and prosperity in Iceland in recent decades. Integrating and ensuring the rights of immigrant workers does pose challenges, however, including providing accessible Icelandic language education.

Sign up for our weekly newsletter

Get news from Iceland, photos, and in-depth stories delivered to your inbox every week!

* indicates required

Subscribe to Iceland Review

In-depth stories and high-quality photography showcasing life in Iceland!