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Lay-offs cause concerns

At Bíldudalur, Akureyri, Reyðarfjörður and Stöðvarfjörður, 140 people were given notice at the end of May. The layoffs involved three companies in the fisheries industry and one agricultural products company.

Spokespersons for all companies blamed a worsening competitve landscape caused by the high exchange rate of the Icelandic króna. The Icelandic currency has been pushed higher because of substantial inflow of foreign capital, much of which is related to the hydroelectric dam at Kárahnjúkar and the Alcoa aluminum smelter it will serve in Reyðarfjörður. Both are currently under construction.

“It was foreseeable when these projects were entered into that the countermeasures of the Icelandic Central Bank would crowd out other export industries” said Ásgeir Jónsson an economist with Kaupthing Bank to Fréttablaðið today.

Edda Rós Karlsdóttir, head of the reasearch department at Landsbanki, concurs.” At Landsbanki, we have for some time been pointing out that a high exchange rate would disproportionately impact the rural areas where commercial activity lacks diversity and is concentrated in the fisheries and tourist industries. Unfortunately, our predictions are coming true,” she said to Fréttablaðið.

Edda also serves on the board of directors of the state power company Landsvirkjun which is building the dam at Kárahnjúkar.

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