March Labour Report Shows Slight Decrease in Unemployment

reykjavík construction

The monthly report issued yesterday by the Directorate of Labour shows a slight decrease in March unemployment numbers.

The Directorate of Labour report shows March 2024 unemployment rates sitting at 3.8%, a decrease from February’s rate of 3.9%. In total, the report shows an average of 7,518 unemployed individuals in March 2024.

Differences by gender, region

Of the total unemployed in March 2024, some 4,344 were men, and 3,174 were women.

There were also some regional differences in unemployment. As might be expected, unemployment rates were higher on the Reykjanes peninsula, the area affected by the ongoing eruptions near Grindavík. Unemployment on the Reykjanes peninsula was recorded at 6.5% for March 2024, a slight decrease from 6.9% in February.

Unemployment rates generally went down for the entire nation except in the capital region. In the capital region, rates remained stable at 3.8%.

North Iceland saw the lowes rates, at 1.5%, and the next-lowest rates were recorded in East and West Iceland, around 2.7%.

Other figures from the report

A total of 283 new jobs were advertised in March through the Public Employment Service.

In March, 81 individuals received recruitment subsidies within companies or institutions, and eight individuals received start-up subsidies.

In March 2024, the Public Employment Service issued 142 work permits to foreign nationals to work in Iceland, 110 of which were in the capital area.

 

 

 

September Sees Slight Uptick in Unemployment Rate

building construction cranes Garðabær

Iceland’s unemployment rate rose from 2.9% in August to 3% in September, according to a new report from the Directorate of Labour. Foreign citizens compose 51% of the unemployed population.

Slight increase from August

In a recent report by the Directorate of Labour, Iceland’s unemployment rate for September was recorded at 3%. This marks an increase from 2.9% in August but is consistent with the figures from May of the same year. For comparison, the rate was slightly higher at 3.2% in September of 2022. The Directorate anticipates that the unemployment rate for October will hover between 2.9% and 3.2%.

The report further details that an average of 5,734 individuals were registered as unemployed in September, comprising 3,175 men and 2,559 women. By the month’s end, the total number of unemployed individuals rose to 6,035.

Unemployment rate highest in Southern Peninsula

Last month, Suðurnes, located on the southernmost side of the Reykjanes peninsula, recorded the highest unemployment rate at 4.2%. This marked an increase from 3.9% in August. Conversely, the Northwestern region of Iceland had the lowest unemployment rate at 0.6%. East Iceland reported an unemployment rate of 1.3%, while West Iceland’s rate stood at 1.7%. In the capital region, the unemployment rate remained steady at 3.3%, unchanged from the previous month.

Over 1,000 out of work for more than a year

As noted by Mbl.is, by the end of September 2023, 1,159 individuals had been unemployed for over 12 months. This figure represents a decrease of 67 from August. For context, in September 2022, the count stood at 2,046, indicating a year-over-year reduction of 887. Additionally, 1,469 individuals had been unemployed for a duration of 6-12 months in September 2023, a slight drop from 1,566 in September 2022.

The report highlights that the tourism sector experienced the most pronounced increase in unemployment compared to the previous month.

Foreign citizens overrepresented

The report also finds that there were 3,056 foreign citizens who were unemployed at the end of September, which is an increase of 160 from August. The proportion of foreign nationals on the unemployment register was about 51% by the end of September.

An assistant professor of economics at Reykjavík University recently maintained that the overrepresentation of foreign citizens in unemployment figures suggested that foreign citizens in Iceland faced additional obstacles when it came to finding work.

Record Population Growth Last Year – 400,000 Milestone in Sight

Locals and tourists enjoy the sunshine in Reykjavík's Austurvöllur square.

Iceland’s population rose by 11,500 in 2022, potentially reaching 400,000 this year, according to a report from the Housing and Construction Authority. The proportion of working immigrants in the national labour market has quadrupled since 2003.

On course to reach 400,000 by end of the year

Iceland’s population increased by 11,500 last year, marking the most significant growth since records began. According to a monthly report of the Housing and Construction Authority, this growth trend has continued in 2023; in the first six months of the year, the country’s population increased by 1.7%. If this trend continues, the increase this year will surpass last year’s, with Iceland’s population reaching 400,000 by year-end.

The report also notes that foreign nationals currently compose nearly 18% of the population or over 70,000 individuals. Furthermore, foreign nationals constitute about 30% of the age group between 26-36 years. The institution notes that, based on tax data, the proportion of working immigrants in the Icelandic labour market has quadrupled since 2003, rising from just over 5% to over 20% last year.

In an interview with RÚV yesterday, Katrín Ólafsdóttir, an associate professor at the University of Reykjavik, stated that since the tourism sector began its rapid growth, there had been a strong correlation between Iceland’s economic growth and the number of foreign nationals: “The correlation was much weaker in the years before, but the last ten years show a very strong link.”

Foreign nationals nearly 50% of the unemployed

While working immigrants in the Icelandic labour market have quadrupled since 2003, the proportion of foreign nationals among the country’s unemployed population has also seen a sharp increase in recent years, now reaching nearly 50%.

Speaking to RÚV, Unnur Sverrisdóttir, Head of the Directorate of Labour, expressed concerns about this trend, noting that various measures had been tried without the desired success. Unnur speculated that several factors may be contributing to the trend, including language proficiency and challenges related to childcare, especially for single mothers who might not have the same support system as native Icelanders.

Unnur also emphasised the need for a better understanding of the issue and highlighted potential gaps in educational opportunities for younger foreign nationals in Iceland, especially those who aren’t proficient in Icelandic.

Foreign Citizens in Iceland Face More Difficulties Finding Jobs

Reykjavík restaurant workers

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.

How can I move to Iceland?

Reykjavík pond downtown

Iceland is a beautiful country with much to recommend it: a generally progressive government, friendly locals, a photogenic landscape, and much more. We get a lot of questions at Iceland Review from people thinking about relocating here. We completely understand the impulse, but a word of fair warning: it’s not all the pretty pictures from Instagram! Of course, we’re still in love with Iceland, but for those planning immigrating to Iceland, be prepared for a language barrier, high cost of living, and dark winters.

With those words of warning out of the way, here are our tips on how to move to, and live in, Iceland.

Visas in Iceland

How easy it is to move to Iceland will depend where you come from. Citizens of European Union (EU), European Economic Area (EEA), and European Free Trade Association (EFTA) nations can enter Iceland without any special documentation. Citizens of these nations may work and live here for up to three months, after which they need to register at Registers Iceland.

For citizens outside these countries, notably including the US and UK, the process is admittedly more difficult. There are three major ways to secure a visa for this group: work, marriage, and education. Many younger people will find that attending university in Iceland is an exciting adventure. Education in Iceland is also free, except for a nominal registration fee. Upon graduating, they may choose to settle down in Iceland and find jobs, or else move on. Obtaining a work permit can be a tricky process, as the employer needs to prove, in theory, that the role could not be filled by a native. For most non-specialist roles, this is rather tricky, although Iceland has recently suffered from shortages in healthcare and education. Finding out what fields are in demand in Iceland may be a way of securing a work permit. Finally, the marriage option is not for everyone, and we are by no means suggesting a marriage of convenience! However, if you do happen to fall in love with an Icelander, then Iceland can be an excellent place to raise a family, with comparatively generous parental leave and socialized healthcare.

If you stay in Iceland for long enough, you will also need to register for a kennitala, or social security number. Your kennitala will be used in pretty much all aspects of life here, much more so than in some other countries. You may, for instance, be asked for your kennitala when making a purchase at the store, when registering for a library card, buying a bus pass, or getting a membership to the gym. Rules for registration break down residents into three major groups: citizens of other Nordic countries, EU/EEA/EFTA citizens, and citizens from outside EU/EEA/EFTA. See the Registers Iceland site here for more information on registering to live in Iceland.

If you are still curious about your status, the Directorate of Immigration has a site where you can check whether you will require a visa in Iceland.

If you are curious about work permits in Iceland, you may find the Directorate of Labour’s website helpful.

Housing in Iceland

The housing market can be difficult to break into for recent immigrants. Reykjavík has exploded in the last 15 years with international interest in hotels and development, driving the cost of real estate up. Iceland’s population has also grown rapidly in the last years, and housing development has not kept pace, leading to a housing shortage. Icelanders also generally tend to own their homes, meaning that relatively few houses on the market are for rent.

Rent will of course depend on location, but it generally makes sense for foreigners to move to the capital area due to transportation and job opportunities. As a rule of thumb, for a modest apartment, you can expect to spend around ISK 200,000-300,000 (around USD 1,380-2,070, or EUR 1,420-2,130 at the time of writing). It’s of course possible to find cheaper, but expect a less-than-ideal location, roommates, and the like.

These listings may be helpful for you in your search for housing in Iceland:

Job Hunting in Iceland

Iceland is a great place to work, with plenty of rights and benefits granted to employees. Icelandic unions have also earned Icelandic workers such benefits as stipends for continuing education, and even provide vacation homes to their workers. Some of Iceland’s biggest general trade unions are VR and Efling.

Some may have an image of Iceland as a largely agricultural society, still farming and fishing like in the past. Although these professions do indeed play an important role in the Icelandic economy, the job market in Iceland increasingly favors professions with advanced degrees. Some of Iceland’s largest industries are tourism, service and restaurants, fishing, and construction. Additionally, many in the capital area are also employed in tech, finance, government, media, and academia.

If you’re looking for a job in Iceland, you may find these links helpful:

Other Useful Links for Prospective Icelanders

Never Been More Difficult to Hire Staff: September Unemployment at 2.8%

Reykjavík pond downtown

Unemployment rates sat at 2.8% in September, creating tension in the labour market.

Although this may sound like a good development, according to the Federation of Trade and Services, hiring new staff has never been more difficult for Icelandic employers.

In a statement to RÚV, Landsbankinn economist Una Jónsdóttir said that instead of employees competing for jobs, it is now the case that employers are competing for staff.

In total, around 5,400 were unemployed in September, largely representing the retail, service, transportation, and restaurant industries.

Of these 5,400, 44% are reported to be foreign residents in Iceland. In comparison with the total unemployment rate for Iceland of 2.8%, the unemployment rate for foreigners is double, at 5.6%.

Iceland’s Suðurnes region is notable as having an especially high unemployment rate of 4.8%, with the capital region sitting around 3.2%. Icelandic unemployment is lowest in the Northwest, which has only 0.7%.

Economists have suggested that the increased demand for labour created by the low unemployment could affect the upcoming wage negotiations.

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.”

Unemployment Dropped to 3.9% in Iceland Last Month

Reykjavík restaurant workers

Registered unemployment in Iceland measured 3.9% in May, a reduction of 0.6% compared to the previous month. On average, 812 fewer people were unemployed in the country in May than in April. Unemployment is higher among foreign residents, who have more difficulty finding employment that corresponds to their education or training than Icelandic citizens.

Unemployment decreased in all regions of the country last month, according to the Directorate of Labour’s monthly report. As per usual, unemployment remains highest on the Suðurnes peninsula in Southwest Iceland, where it nevertheless decreased from 7.6% in April to 6.6% in May. The next-highest regional rate is in the capital area, where unemployment decreased from 4.7% to 4.2% between the two months. Unemployment rates in May were somewhat higher among men than women.

Recognition of foreigners’ education lacking

Of the 7,713 individuals that were on the unemployment register at the end of May, 3,331 were foreign citizens, 526 fewer than in the previous month. This number nevertheless reflects higher unemployment rates among foreign residents of Iceland than Icelandic citizens, or 8.5%, compared to the overall rate of 3.9%. Foreign citizens make up 43% of those on the unemployment register, while they make up around 15% of the total population of Iceland.

The Director of Iceland’s Labour Directorate, Unnur Sverrisdóttir, says many foreigners on the unemployment register would be working if their education and training from abroad were recognised in Iceland. “[They] often have a lot of difficulty in getting their work experience and education recognised, that is often the explanation for [them being unemployed],” Unnur told RÚV. “There’s a certain amount of paperwork and of course some obstacles there. And that’s what we work most on, helping people to find a way to have the knowledge and education that they bring with them – which is often extensive – recognised.”

The Directorate of Labour expects the decrease in unemployment to continue, projecting a rate of 3.5-3.8% in June.

Iceland’s Economic Outlook “Improving,” Despite Rising Inflation

Bjarni Benediktsson icelandic politics

The annual inflation rate hit 6.7% this morning. It hasn’t been higher since May 2010. In a press conference today, introducing the government’s fiscal plan, Finance Minister Bjarni Benediktsson maintained that the economic outlook was “improving.”

Housing, gas, and clothing driving inflation

According to data published on the website of Statistics Iceland this morning, the annual inflation rate in Iceland has hit a near 12-year high: 6.7% – an increase of almost a percentage point (0.94%) since last month.

The biggest driver for this recent increase has been a rise in the price of housing, gas, and clothing. The price of oil and gas rose by 8.2%, the cost of housing by 2%, and the price of clothing and footwear by 5.3%.

As noted by RÚV, the inflation rate has seen a sharp increase over the past few months. The annual inflation rate was 4.3% in August of last year, and it has risen steadily since then. The first three months of this year have seen the steepest increase, or ca. half a percentage point from December.

The inflation rate has exceeded the Central Bank’s target rates (2.5%) for almost two years, RÚV notes.

Fiscal plan introduced today

Finance Minister Bjarni Benediktsson introduced the government’s fiscal plan today.

“We’re exiting a deep economic depression, in which we employed the state finances to safeguard households and companies … we’ve been protecting our public services and ensuring that we’re prepared to recover when the effects of the pandemic began to subside. I think we’ve been very successful in this regard,” Bjarni stated.

A press release on the fiscal plan echoes the Finance Minister’s statement, stating that “the financial standing of households and companies is strong,” and that the government’s debt prospects have “improved considerably:”

“The government is hopeful that a moderate increase in outlays and continued growth within expanding export industries” will provide “an opportunity to strengthen the (economic) base again and work towards building an even more robust society.”

A few key figures from the press release on the new policy:

  1. The unemployment rate peaked in January 2021 (11.6%). Since then, unemployment has declined steadily, currently sitting at 5.2%, which “is similar to pre-pandemic rates.” The government expects the unemployment rate to fall to 4% during the years that the plan is applicable.
  2. With reference to the Harmonised Index of Consumer Prices, the press release states that although inflation is high, it is lower in Iceland when compared to other European countries. The inflation rate in Iceland, according to the HICP, is 4.4%, compared to the average of 6.2% in Europe. The government hopes to lower the inflation rate with “responsible fiscal management.”
  3. Approximately 7,000 people purchased their first home in 2021, a record number since measurements began. According to the government, the “percentage of households in arrears hit an all-time low in 2021, or 0.9% at the end of the final quarter.”

Matters of emphasis

As noted in the above-mentioned press release, the government will be emphasising several issues in its fiscal plan, among them mental health. The policy area will receive a permanent increase of ISK 500 million ($3.9 million / €3.5 million) in 2023, and an additional increase of ISK 100 million ($800,000 / €700,000) each year for the following two years.

Other notable issues that the government will be emphasising in its policy are investments in research and innovation (ISK 25 billion); combatting the long-term social and health-related effects of the pandemic (ISK 3 billion); and defence and cyber security (ISK 2.2 billion).

2.6% of government spending will be allocated to environmental issues. There was no mention of a national stadium in the fiscal plan.

The fiscal plan will be in effect for the years 2023-2027.

 

This article was updated at 12:48 PM.

A Golden Opportunity: New Program Teaches Vocational Skills to Young People

A new program called Tækifærið (‘the opportunity’) aims to teach young people vocational skills that will allow them to secure steady employment, Vísir reports. In 2022, Tækifærið will offer two, 13-week courses, which will teach practical skills such as how to rip out and replace flooring, paint furniture, and fix electrical wiring, as well as help participants hone their mental, physical, and social skills along the way and connect them with future employers.

The first class has six participants and is being held in Borgarfjörður, West Iceland. It received funding from the Development Fund for Employment and Education, the Mental Health Support Fund, and Landsbankinn, and is free of charge for participants.

‘Each participant must want to change their life for the better’

Tækifærið is the brainchild of Björk Vilhelmsdóttir, a social worker and former member of the Reykjavík City Council. It is founded on one of the United Nations’ three universal values: Leave No One Behind.

“Tækifærið’s organizers have faith in people—all people,” explains the program website. “We’re ready to work with those who are the furthest from the labour market; these individuals possess countless strengths. Tækifærið is built around the strengths of participants and those who work with them. We’re well aware of our weaknesses but are trying our best not to let them dictate our lives anymore.”

The program promises to empower participants, but that empowerment must be self-motivated: “The basic premise of empowerment is that people take responsibility of their own lives…Each participant must want to change their life for the better.”

Half of unemployed individuals are foreign nationals

While the program is targeted at young people in general, Tækifærið will undoubtedly be helpful for young foreign nationals living in Iceland. Unemployment in Iceland is currently 5.2%, or roughly 10,000 people. Just under half of that group, or 43%, are foreign nationals.

Vísir interviewed Alfredo Correia, from Portugal, who is one of the six participants in Tækifærið’s spring 2022 class. “I came to Iceland to grow up, because in my country it’s very hard to live,” he said. Alfredo has no formal education and decided to move abroad to seek better opportunities.

Björk is optimistic that the first class will be successful in finding work after completing the program. “Come May, I’ll be ready to take offers from the business community,” she said, “and I know there will be plenty of them.”