Fishing Industry Profits Spark Wealth Distribution Debate

fishing in Iceland

Iceland’s largest seafood companies made huge profits last year, if the first published financial statements are any indication, Fréttablaðið reports. Opposition MPs are arguing that the industry should be taxed more so its earnings are more evenly distributed throughout Icelandic society. According to Minister of Fisheries Svandís Svavarsdóttir, the nation sees the industry as unjust, largely because consolidation of fishing quota has funnelled large profits into the hands of very few individuals.

Billions in profits

At the end of 2020, the seafood industry’s equity was evaluated at ISK 325 billion [$2.6 billion; €2.4 billion]. In the same year, the industry paid just under ISK 4.8 billion [$37.7 million; €35.2 million] in quota fees, while the state treasury faced record financial challenges due to the coronavirus pandemic.

The fishing industry has continued to grow despite the pandemic recession. Between 2020 and 2021, the total value of catch in Iceland increased around 9%, from ISK 148.3 billion [$1.2 billion; €1.1 billion] to ISK 162.2 billion [$1.3 billion; €1.2 billion], according to figures from Statistics Iceland. Prospects continue to be good, especially since the price of fish has risen dramatically in the wake of the Russian invasion of Ukraine.

Four companies hold 60% of quota

Just four companies hold around 60% of Iceland’s fishing quota: Samherji, Brim, KS, and Ísfélagið. Brim reported profits of ISK 11.3 billion [$88.8 million; €82.9 million] last year, and Síldarvinnslan’s profits are similar. In the first three months of this year, Síldarvinnslan has made profits of nearly ISK 4 billion [$31.4 million; €29.3 million]. Samherji, Kaupfélag Skagfirðinga (KS), and other fishing industry giants have not yet submitted financial statements from last year, but similarly high profits are expected.

In a column published in Morgunblaðið yesterday, Minister of Fisheries Svandís Svavarsdóttir stated that the nation viewed the consolidation of fishing quota in so few hands as deeply unjust, and that it felt that this collective resource was not distributed fairly.

Fishing money in other sectors

Opposition MP and Social-Democratic Alliance Chairman Logi Einarsson echoed these words. “We have watched a huge accumulation of wealth in very few hands, which has also led to a small number of individuals not only holding the majority of fishing quota, but due to this same wealth, accumulated assets in many parts of society, in unrelated sectors.” Logi named these sectors as the media, real estate, transport, grocery stores, energy, and even insurance and banking.

“This creates a very unhealthy situation,” Logi continued. “And now that the entire public expects worsening livelihoods and various healthcare and welfare services are underfunded, quota holders should certainly pay more toward public expenditure, they are well capable of it, to say the least.”

Idea that Iceland Has No Class Divisions a Myth, Says Sociologist

Although it’s often said that Iceland is a country without significant class divisions, a sociologist who has been studying this phenomenon for years says this is far from the truth, Vísir reports.

“What happened here from the mid-1990s up until the financial crisis [of 2008] is that economic inequality increased rapidly,” says Guðmundur Ævar Oddsson, who holds a doctorate in sociology and who for years has studied the phenomenon within an Icelandic context. “Particularly when it comes to income distribution, but also in terms of asset distribution.” Guðmundur says that although income distribution became more equal after the crash, the income gap is starting to widen once again, and so has asset distribution.

According to data from the City of Reykjavík, 2.9% of children up to the age of 17 receive some form of financial assistance from the municipal government. Guðmundur says that childhood poverty is, however, something that could easily be remedied if the decision were simply made to do so.

“All inequality is, in reality, a human invention, such that it’s possible for us to intervene. There’s no natural law that says that childhood poverty should be 5% rather than 0% or 10%,” he explained.

“Of course there are numerous studies—hundreds, if not thousands—that show that as the gap between groups or whatever you want to call the classes increases, it has a negative impact on crime rates, people’s heath, trust between groups, [and] political participation,” says Guðmundur.

Guðmundur’s message to the Efling trade union that he recently addressed and to the government at large simple: “It is to everyone’s benefit—even those who are rich and own the most—to try and keep the gap within reasonable limits.”