Unemployment Rates Drop as Tourism Industry Recovers Skip to content

Unemployment Rates Drop as Tourism Industry Recovers

By Gréta Sigríður Einarsdóttir

Flight attendants WOW air Icelandair
Photo: Flight attendants at Keflavík airport..

The Directorate of Labour has stripped over 350 people of their unemployment benefits between March and May of this year for turning down job offers without sufficient reason, RÚV reports. Icelandic employers have stated it has been difficult to fill positions, even when hiring from among unemployed people, implying that some unemployed people are not interested in working. Economists state that there are other reasons it’s hard to get people back to work as the pandemic winds down and the economy starts back up again.

Job market bouncing back

Complaints from employers in tourism having trouble finding staff have garnered attention, with some implying that individuals receiving unemployment benefits prefer not to work. In April, the general unemployment rate stood at 10.4%, with 20,003 people seeking jobs. Of those, 6,495 had been without employment for more than 12 months.

According to the government’s Let’s get to work campaign website, most of the jobs available through the campaign are in accommodation and tourism, government institutions, retail, and the restaurant industry. Almost 8,500 positions are available and already, at least 2,350 have been filled. The number of positions filled could be even higher as it takes a while for a job seeker finding employment to be fully registered within the Directorate of Labour’s system.

350 stripped of employment benefits

The Labour Director told RÚV that for the three-month period between March and May, the period of the government’s Let’s get to work campaign, just over 350 job seekers had been stripped of benefits for rejecting job offers without explanation or for not meeting activity requirements. They also stated that a similar number of people had been under investigation but it turned out that in most cases, the job seekers in question had already found work or had other valid reasons for turning down job offers. RÚV also inquired how many times employers had notified the Directorate of job offer rejections but those numbers are not available. The Directorate of Labour encourages employers to notify the Directorate if job seekers turn down jobs without valid explanations.

If a job seeker turns down a job without providing a valid explanation, they can lose their benefits for two months. If it happens again, they lose their benefits for three months and if it happens for a third time they lose their right to unemployment benefits altogether. They can reclaim that right after working a full-time job for 24 months.

Unlikely that benefits are too high

The director of the Icelandic Travel Industry Association Jóhannes Þór Skúlason stated in a Kastljós interview that tourism companies had difficulty hiring people from unemployment lists. Hotel and car rental owners have also stated that they’re having difficulties hiring despite high unemployment rates. The new director of BHM Union Friðrik Jónsson stated yesterday that any such discussions should be based on fact, not conjectures. All talk of unemployment benefits being too high, and unemployed people being the problem, couldn’t be supported with logic or statistics. Strætó, the public transportation company, has stated that they have had no trouble filling empty positions, suggesting that job seekers see tourism as an uncertain industry right now and are looking for jobs they believe are more stable.

While employers have complained that it’s hard to get people to work, implying that people are choosing not to work and live off benefits instead, the Landsbankinn economy department has stated that income loss due to unemployment was considerable, even for low-income workers, and that it was unlikely that unemployment benefits kept people from accepting job offers. The more likely reason was that people didn’t have faith that the pandemic was over.

Considerable loss of income

The latest economic report by the Landsbankinn economic department states that regular unemployment benefits are around 55% of average income in Iceland, or ISK 307,000 ($2,550/€2,090). The maximum amount of income-linked unemployment benefits is ISK 475,000 ($3,940/€3,240), about 70% of an average income. For people with higher income, benefits they are eligible for constitute an even lower percentage of their salary. The report points out that all over the world, employers are finding it hard to fill positions created by increasing demand as the pandemic winds down. In Iceland, such positions are mostly low-income jobs in the tourism sector.

“It is estimated that around 30 million fewer people are employed in the richer part of the world than before the pandemic. Such a situation comes with a lot of waste, not just in lost income but also in declining health, skills, and pride within the workforce. It can’t be ruled out that people’s fear of the pandemic plays a part. If so, we can assume that interest in jobs will increase as more and more people are vaccinated and the pandemic winds down.”

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