Will Parental Leave Be Extended to 12 Months? Skip to content

Will Parental Leave Be Extended to 12 Months?

Last week, Icelandic Minister of Social Affairs and Housing Eygló Harðardóttir introduced a draft resolution regarding parental leave, RÚV reports. She hopes the resolution will be passed in parliament before October’s elections.

The draft resolution suggests that the combined parental leave of both parents be extended from nine to twelve months, taking effect in increments in 2019, 2020 and 2021. Besides, it suggests that maximum monthly pay during parental leave be increased from ISK 370,000 (USD 3,100, EUR 2,800) to ISK 600,000 (USD 5,000, EUR 4,500).

The report on which the draft resolution is based estimates that the cost of these changes will run around ISK 5 billion (USD 42.2 million, EUR 37.7 million).

The Parental Leave Fund is operated with a 7.35 social insurance tax (paid by employers as a percentage of the salary of employees), which also funds unemployment payments. Eygló maintains that fewer births and a low unemployment rate have created a surplus which can be used for funding the changes she proposes.

Head of SA – Business Iceland Þorsteinn Víglundsson does not believe it makes sense to extend parental leave, as suggested in the draft resolution, but he supports increasing the maximum monthly pay. He would like to see the social insurance tax go down.

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