Labour market information

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Iceland - National Level

Short overview of the labour market

 

Iceland has a population of 356 991 (1 January 2019) and the population growth was 2.4% in 2018. The Icelandic nation is one of the youngest in Europe – the average age is 38 and 70% of the population is under fifty. The Icelandic labour market is characterised by a high participation rate. In 2018, 81.6% of all able-bodied individuals aged 16-74 participated in the labour market.

The most important sectors in Iceland are service industries such as travel, financial services and health services, miscellaneous industries, agriculture and fishing. The relative importance of these sectors has changed somewhat recently. The significance of service industries, for example, has increased considerably in recent years while fishing and other production industries have declined.

39% of people in the labour market are university graduates, 35% have completed higher education (including vocational qualifications) and 26% have finished secondary education. Another characteristic of the Icelandic labour market is the high proportion of trade union membership, standing at 85%.

Unemployment has been low in recent years, or about 2-3%. In 2018, the average unemployment rate was 2.4% compared to 2.2% in 2017. So far in 2019, unemployment has increased and in April the unemployment level rose to 3.7%. Among young people aged 18-24, unemployment reached 2.8% in April and 7.1% among non-nationals.

Expansion has been a feature of the market over the past year, and employment grew by an average of 4 400 jobs per year between 2012-2017. The increase in employment has been in line with economic growth. It is expected that in the next few years the employment increase will decrease along with falling economic growth and that we might even enter a recession.

In the first quarter of 2019, 36 844 non-nationals were employed in the Icelandic labour market, i.e. 19.2% of the total labour force. It is likely that this amount will decrease in the coming months and quarters in view of lower economic growth and indications of a potential recession.

 

Text last edited on: 06/2019