Iceland’s labour market weakened markedly in the second quarter, with unemployment rising to 6.5%, according to Statistics Iceland.
An average of 15,400 people were unemployed and actively seeking work, up from 8,400 a year earlier, while employment fell by 9,000.
What’s the Story?
- Unemployment rose from 3.5% in Q2 2025 to 6.5% in Q2 2026.
- Employment fell by 9,000 people year-on-year and the employment rate dropped 4.3 percentage points.
- Youth unemployment reached 17.3%, up from 7.6% a year earlier.
A cooler labour market
Statistics Iceland counted 237,700 people in the labour force, of whom 222,300 were employed. The employment rate was 75.8%.
The deterioration was particularly sharp among younger workers: unemployment among people aged 16–24 reached 17.3%. Iceland Review has recently covered the broader slowdown in the economy and the pressure high inflation places on wage agreements.
Source: Statistics Iceland.
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