Economic Inequality Impacting Health Care in Iceland

Director of Health Alma Möller

According to Director of Health, Alma Möller, Icelandic authorities must tackle economic inequality, as it affects health care outcomes.

In an interview with Heimildin this weekend, Alma said that even if most people imagine there to be equality when it comes to health care in Iceland, the reality is different. “People with an economic disadvantage are more likely to have long-term illnesses that can greatly impact their quality of life and shorten it,” she said.

She added that improving the health of the poor is a task that the health care system can not accomplish alone. “Authorities need to make equality a priority and society as a whole needs to work together,” she said. “Because inequality affects us all.”

Inherited poverty

The Directorate of Health is a government agency that promotes high-quality and safe health care for the people of Iceland, health promotion, and effective disease prevention measures. Alma, the first woman to serve as Director, is therefore a key voice on health care policy in Iceland.

“We need to face this issue and start with the children,” she said. “Nothing is more valuable for communities than to keep children out of poverty. If people start their lives in a tough spot, it’s hard for them to recover. We need to create conditions in society so that people have the opportunity to live a healthy life. Poverty, in fact, is something that people inherit, much like trauma.”

Excess outsourcing

Alma is an anaesthetist and intensive care physician who turned her attention to public health. She became Director in 2018 and was a leading figure during the Covid-19 pandemic.

In the interview, she went on to warn against excess outsourcing of health care services to private companies that could weaken the core competencies of the Landspítali, The National University Hospital of Iceland. “Decisions on outsourcing must always be made on the basis of patient welfare and the common good,” she said.

Richest 0.1 Percent Gets Richer

currency iceland

The wealthiest 242 families in Iceland saw their wealth grow by ISK 28 billion [$207 million, €186 million] last year. On average, each of these families gained ISK 116 million [$858,000, €772,000] in one year, Heimildin reports.

This group, the top 0.1 percent richest Icelandic families, has almost no debt, as their equity ratio stands at 98.4 percent. Each family owned on average ISK 1.5 billion [$11 million, €10 million] at the end of 2022 and owed only ISK 23 million [$170,000, €153,000].

Money attracting money

Although income inequality in Iceland ranks among the lowest in Europe, according to the Gini coefficient, wealth inequality remains a topic of debate. This recent data was reported by Minister of Finance Þórdís Kolbrún Reykfjörð Gylfadóttir in Alþingi as a response to an information request by Logi Einarsson, MP for the Social Democratic Alliance.

The data shows that the richest Icelanders earn most of their money by letting their money work for them. They invest in stocks and bonds, buy and sell businesses, and invest in property to be rented out or sold for profit. Therefore, nearly three quarters of the top 0.1 percent’s income was capital income. These earnings, which include dividends and profits from selling assets, are taxed at a lower rate of 22 percent, compared to the tax on wage income, which varies from 31.45 to 46.25 percent depending on the tax bracket.

In fact, 28 percent of all capital income in Iceland in 2022 went to these 242 families. If the group is widened to include the entire wealthiest top 1 percent, they received 46 percent of all capital income in Iceland last year.

Undervalued assets

Still, the assets of the top 0.1 percent are undervalued in these calculations. The data doesn’t include assets of Icelanders in pension funds and share prices are reported at their nominal value, instead of the market value which they could be sold at currently. The top 10 percent of wage earners last year owned 85 percent of all stocks held by households at the end of last year. These shares are worth a lot more than their nominal value indicates and, in all probability, the richer the family, the more shares it likely owns.

All in all, the wealth of all Icelandic households grew substantially last year, by ISK 1,624 billion [$12 billion, €11 billion] in total. The wealthier families received a disproportionally large share of this increase. Heimildin adds that for most Icelandic households, their wealth increase comes from rising property prices. Three quarters of Icelandic residential housing is held by people who own one property, generally the one they live in. For most people, this wealth could therefore only be realised by them selling their homes.

Large Income Gap in Iceland Based on Sexual Orientation

Crowds gathered at Austurvöllur to show solidarity with Norway.

Despite being on average more educated, homosexual men in Iceland make roughly 33% less than heterosexual men, a new study has found. The new data gives the country an opportunity to make improvements, the chairman of the Icelandic Confederation of University Graduates (BHM) says. RÚV reported first.

The study was conducted by BHM in collaboration with The Federation of State and Municipal Employees (BSRB), the Confederation of Labour (ASÍ), the National Queer Organisation of Iceland (Samtökin ’78), and the University of Iceland’s Institute of Economic Studies. It involved a survey as well as analysis of jointly-taxed men and jointly-taxed women’s tax returns for the year 2019.

Job insecurity higher among LGBTQ+ community

While the study found that gay men made around a third less than straight men, it also found that lesbians made around 13% more than straight women. Vilhjálmur Hilmarsson, an economist at BHM, wondered why this was the case. “What people consider masculinity, is there a premium for that on the Icelandic labour market?”

Of the groups that were compared, gay men fared worst in the COVID-19 pandemic: nearly four out of every ten received unemployment benefits during the pandemic, which the study’s authors contributed to the fact that many homosexual men work in the service industries.

The study also showed that trans people experienced higher job insecurity: seven out of ten stated that they had experienced unemployment.

BHM Chairman Friðrik Jónsson stated that the new data made the problem impossible to deny. “We need to respond, we need to take action. That’s the main thing this work shows, for me. Having the evidence gives us the weapons and tools to say, alright, how can we solve this? How can we improve our society? Because at the end of the day, that’s what we all want. We want to live in a better society, for everyone.”

In Focus: Poverty and Inequality in Iceland

Even though Iceland is a prosperous country, polls suggest most Icelanders consider poverty the country’s second most pressing issue after healthcare. Despite Iceland’s relative prosperity, poverty in Iceland does exist. While global poverty is decreasing, poverty and inequality in Iceland are on the rise. Children’s poverty is rising at an alarming rate, while senior citizens […]

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