Foreign citizens make up nearly 50% of those currently unemployed in Iceland, while they only make up 15-20% of the population, RÚV reports. This overrepresentation shows that foreign citizens in Iceland face additional obstacles when it comes to finding work, says Katrín Ólafsdóttir, assistant professor of economics at Reykjavík University.
Language skills not the only explanation
The overrepresentation of immigrants on the unemployment register is not new. It was also the case throughout the COVID-19 pandemic. In 2021, Gundega Jaunlinina of the Icelandic Confederation of Labour (ASÍ), stated it is often more difficult for unemployed foreigners to find work than for Icelanders. “Because people may not be as active in their job search and don’t know exactly where they should look and employers are unfortunately less likely to hire foreign workers,” she stated.
“It seems that Icelanders have priority, to some extent, when it comes to jobs,” Katrín Ólafsdóttir observes. “But why that is, I don’t know. This is something that I think we need to take a closer look at, what is going on there. Possibly it has to do with Icelandic language skills, or something like that. But that can’t be the only reason.”
High participation rates but little support
While foreign citizens are overrepresented on the unemployment register, immigrants in Iceland have very high economic participation rates. The latest OECD Economic Survey of Iceland found that of all OECD countries, immigrants in Iceland had the highest participation rate, at over 85%. The survey emphasises that Iceland should step up its efforts to better integrate migrants and their children, including through more effective language courses, skills recognition, teacher training, and meeting immigrants’ housing needs. Other recent labour market studies have also called on authorities to ensure immigrants’ job security and mental health.
The OECD survey also found that immigration brought large economic benefits to Iceland’s economy, something Katrín underlines as well. She asserts that Iceland would not have experienced as much economic growth in recent years if it had to been for the influx of foreign workers onto the labour market. “We would never have been able to support the increased service to tourists without more helping hands,” she stated.
Unemployment low in general
Unemployment in Iceland is relatively low, with the seasonally adjusted unemployment rate standing at 3.3% in August 2023 according to figures from Statistics Iceland. The unemployment rate decreased by 0.2% between months while the employment rate increased by 0.9% and the activity rate by 0.8%. In total, some 7,600 people were unemployed in August of this year. Iceland’s population is 387,758.