The Icelandic labour market in

numbers

Eures Conference in June 2007

Karl Sigurdsson

Key figures 2006 from the labour market survey of Statistics IcelandWorking age population Ca. 210,000

Labour force (16-74) 174,600

Participation rate 83.1%

Number of unemployed 5,000

Unemployment 2.9%

Working hours average 42.4

Working hours- full time 47.2

Source: Statistics Iceland

Participation rate 16-74 years by age

50%

60%

70%

80%

90%

100%

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Total 16-24 years 25-54 years 55-74 yearsSource: Statistics Iceland

0

10

20

30

40

50

60

70

80

90

Icelan

d

Sweden

Korea

Japa

n

Norway

New Z

ealan

d

United

Stat

es

Mex

ico

Portug

al

United

King

dom

Canad

a

Denmark

Austra

lia

Turke

y

Greece Spa

in

Finlan

d

Poland

German

y

Hollan

dIta

ly

Czech

Rep

ublic

France Belg

ium

Luxem

bour

g

OECD-total

Participation rate of 60-64 years old

in labour force in 2004

Source: Eurostat and more

Working hours 16-74 years by gender and areas

30

35

40

45

50

55

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Total Men Women Capital area Other areas

Source: Statistics Iceland

Unemployment in 2006, by gender, age and area. (Labour market research).

Total Capital area Other areas

Total 2.9 3.0 2.6

16-24 years 8.2 7.7 9.6

25-54 years 1.8 2.0 1.5

55-74 years 1.5 1.8 1.0

Male 2.7 3.0 2.2

16-24 years 8.9 8.4 10.0

25-54 years 1.7 2.0 1.1

55-74 years 1.0 1.3 0.6

Female 3.1 3.1 3.0

16-24 years 7.6 7.0 9.2

25-54 years 2.0 2.1 1.9

55-74 years 2.1 2.3 1.7

Source: Statistics Iceland

Unemployment in end of year 2006 in EU and some other countries

Source: Eurostat and more

0%

2%

4%

6%

8%

10%

12%

14%

Ice

lan

d

De

nm

ark

Ne

the

rlan

ds

No

rwa

y

Jap

an

Est

on

ia

Ire

lan

d

US

A

Au

stria

Cyp

rus

Lu

xem

bu

rg

Slo

ven

ia

UK

Lith

ua

nia

Sw

ed

en

La

tvia

Cze

ch R

ep

ub

lic

Italy

Ma

lta

Po

rtu

ga

l

Fin

lan

d

EB

Be

lgiu

m

Hu

ng

ary

Ge

rma

ny

Ro

ma

nia

Bu

lga

ria

Sp

ain

Fra

nce

Gre

ece

Slo

vaki

a

Po

lan

d

Unemployment 1997-2007 (registered)

1,31,3

2,1

3,13,4

2,5

1,41,31,9

2,8

3,9

0%

1%

2%

3%

4%

5%

6%19

97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Year average

Monthly

Unemployment trends by age

0%

2%

4%

6%

8%

10%

maí.02

sep.0

2

jan.03

maí.03

sep.0

3

jan.04

maí.04

sep.0

4

jan.05

maí.05

sep.0

5

jan.06

maí.06

sep.0

6

jan.07

maí.07

16-24 years

25-54 years

55-70 years

Unemployment in capital area and other areas

0%

1%

2%

3%

4%

5%

maí.02ág

ú.02

nóv.0

2feb

.03maí.

03ág

ú.03

nóv.0

3feb

.04maí.

04ág

ú.04

nóv.0

4feb

.05maí.

05ág

ú.05

nóv.0

5feb

.06maí.

06ág

ú.06

nóv.0

6feb

.07maí.

07

Total Capital area Other areas

Unemployment by gender and areas

0%

1%

2%

3%

4%

5%

maí.04

júl.04se

p.04nó

v.04jan

.05

mar.05maí.

05júl.

05se

p.05nó

v.05jan

.06

mar.06maí.

06júl.

06se

p.06nó

v.06jan

.07

mar.07maí.

07

Men capital area Men other areasWomen capital area Women other areas

Unemployment by economic activity

0,8%

2,1%

2,4%

1,5%

0,3%

0,9%

1,5%

2,3%

1,3%

0,4%

1,2%

0,8%

1,0%

0% 1% 2% 3% 4% 5% 6%

Agriculture

Fishing

Fish processing

Manufacturing

Electr./water supply

Construction

Wholesale, retail trade

Hotels, restaurants

Transport, communic.

Financial interm.

Real estate/business

Public sector-educ-healt

Other services

2004

2005

2006

Unemployment by education

2,3%

0,4%

0,6%

0,6%

1,1%

1,0%

0,7%

0% 1% 2% 3% 4% 5% 6% 7%

Primary education

Vocational education

Engineering /navigation

Apprenticeship

Business college

matriculation examination

Higher education

2004

2005

2006

Why is labour contribution and participation so high in Iceland?

Strong work ethic in Icelandic culture Essential that everybody contributes to the

smooth operation of the society Great demand for labour linked to small size of

economy Difficult to “get lost” outside of labour market

in small population Wages low compared to high cost of living and

high living standards Benefit system has not been as comprehensive

as in at least the other Nordic countries

Employed people by economic activity, average 2005-2006

Number

Agriculture 5.900Fishing 4.600 6,3%

Fish processing 4.400Manufacturing, except fish pr. 16.200Electricity & water supply 1.500Construction 13.600 21,6%

Wholesale, retail trade, repairs 23.100Hotels, restaurants 5.700Transport, communication 11.900Financial intermediation 6.900Real estate & business activ. 15.000 37,8%

Public administration 8.800Education 12.200Health sevices, social work 24.600 27,6%

Other services and n.s. 11.000

Total 165.400Source: Statistics Iceland

3,6%

2,8%

2,7%

9,8%

0,9%

8,2%

14,0%

3,4%

7,2%

4,2%

9,1%

5,3%

7,4%

14,9%

6,7%

0% 5% 10% 15% 20%

Number of employed people 1991-2006 by economic activity

0

20000

40000

60000

80000

100000

120000

140000

1991

1993

1995

1997

1999

2001

2003

2005

Agric./Fishing

Manuf. & Constr.

Services

Upswing/depression, emigration and import of labour

Interaction between economical changes and emigration

Import of foreign labour to Iceland Number of foreign citizens in Iceland Some questions:

Who are coming to Iceland? From where? Men or women? Background? Doing what? Which jobs? Staying in Iceland og leaving?

Speculations Demand for labour is the most important factor

determining number of foreigners entering Icelandic labour market

Government policies and the legal framework controls which foreignes arrive in Iceland. Employment policy has the greatest effects on import of labour

– the expansion last years not possible without this import. The reason for immigrants coming to Iceland is the demand for

labour – go to Iceland to find job and get higher wages. The situation and development in many ways different from

that in the other Nordic countries – not many refugees, mostly working people, few whole families, few children.

Immigrants are for the biggest part people from EEA. Unemployment very low despite this import of foreign labour,

lower among immigrants than native people.

Number of foreigners in Iceland, 1981-2006

6%

10%

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

Foreign citizens

Born abroad

Source: Statistics Iceland

Net migration to/from Iceland last 20 years compared with unemployment trends

Source: Statistics Iceland and Directorate of Labour

-2000

-1000

0

1000

2000

3000

4000

5000

6000

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Ne

t m

igra

tio

n

0%

1%

2%

3%

4%

5%

6%

7%

8%

Un

em

plo

ym

en

t

Net migration

Unemployment

Foreign citizens on the labour market in the Nordic countries as proportion

of labour force 2001-2005

Source: Statistical bureaus in the Nordic countries

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

2001 2002 2003 2004 2005 2006

Finland

Denmark

Norway

Iceland

Sweden

*Figures for 2006 are estimated. Also figures for Sweden in 2005

New temporary work permits + registrations from NMS 2006 and

2007

0

2.000

4.000

6.000

8.000

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Registrations from NMS

New temp. work permits

New temporary work permits 2005 and up to 1. May 2006 by citizenship

  Number Percent

Poland 3.655 46%

Lithuania 492 6%

China 365 5%

Latvia 264 3%

Slovakia 195 2%

Romania 135 2%

USA 131 2%

Serbia 116 1%

Philippines 112 1%

Other countries 640 8%

Total 6.105 100%

New temporary work permits 2005 and up to 1. May 2006 by sectors and occup.

 sectors N %

Agriculture 139 2%

Fishing 117 2%

Fish processing 548 9%

Meat industry 154 3%

Manufacturing 440 7%

Construction 3.549 58%

Wholesale, trade 597 10%

Hotels, restaurants … 442 7%

Health serv. / education 155 3%

Total 6.141 100%

occupations  N %

Legisl./managers 311 5%

Services 240 4%

Fishermen 26 0%

Craftsmen 1.413 23%

Specialized trade workers 776 13%

Plant/machine operators 395 6%

Elementary occupation 2.781 45%

Sportsmen / trainers 111 2%

Dancers 144 2%

Total 6.197 100%

New temporary work permits 2005 and up to 1. May 2006 by gender

  Male Female

Agriculture 2% 4%

Fishing 1% 5%

Fish processing 5% 24%

Meat industry 2% 5%

Manufacturing 8% 4%

Construction 70% 6%

Wholesale, trade 8% 19%

Hotels, restaurants … 4% 23%

Health serv. / education 1% 10%

Fjöldi 4.887 1.157

  Male Female

Legisl./managers 5% 7%

Services 2% 14%

Fishermen 0% 0%

Craftsmen 28% 1%

Specialized trade work. 14% 7%

Plant/machine operat. 8% 1%

Elementary occupation 43% 55%

Sportsmen / trainers 1% 3%

Dancers 0% 12%

Fjöldi 4.934 1.165

New temporary work permits 2005 and up to 1. May 2006 by age and gender

  Number Percent   Male Female

16-29 years 2.040 33% 27% 60%

30-39 years 1.808 29%   31% 23%

40-49 years 1.551 25% 28% 10%

50 years and over 775 13%   14% 6%

Total 6.174 100%   100% 100%

Total labour force working in power-intensive industry projects in Iceland

0

1000

2000

3000

4000

4. á

rsfj.

2005

1. á

rsfj.

2006

2. á

rsfj.

2006

3. á

rsfj.

2006

4. á

rsfj.

2006

1. á

rsfj.

2007

2. á

rsfj.

2007

3. á

rsfj.

2007

4. á

rsfj.

2007

1. á

rsfj.2

008

2.ár

sfj.2

008

3.ár

sfj.2

008

4.ár

sfj.2

008

Stjórnun /sérfr.

Ýmsir iðn.menn

Verkamenn

Bílstjórar-vélamenn

Labour force building the power plant at Kárahnjúkar (Impregilo)

0

200

400

600

800

1000

1200

4. á

rsfj.

2005

1. á

rsfj.

2006

2. á

rsfj.

2006

3. á

rsfj.

2006

4. á

rsfj.

2006

1. á

rsfj.

2007

2. á

rsfj.

2007

3. á

rsfj.

2007

4. á

rsfj.

2007

1. á

rsfj.

2008

2. á

rsfj.

2008

3.ár

sfj.2

008

4.ár

sfj.2

008

Stjórnun /sérfr.

Ýmsir iðn.menn

Verkamenn

Bílstjórar-vélamenn

Labour force building aluminium smelter at Reyðarfjordur

0

500

1000

1500

2000

4. á

rsfj.

2005

1. á

rsfj.

2006

2. á

rsfj.

2006

3. á

rsfj.

2006

4. á

rsfj.

2006

1. á

rsfj.

2007

2. á

rsfj.

2007

3. á

rsfj.

2007

4. á

rsfj.

2007

1. á

rsfj.

2008

Stjórnun /sérfr.

Ýmsir iðn.menn

Verkamenn

Bílstjórar-vélamenn

Towards a landing Coming quarters: adjustment towards stability, but little sign of

contraction. Still for the first time in 5 years, private consumption has dropped as have investments.

Conclusion of current power-intensive industry projects, delay in the commencement of new projects, slowdown in housing construction.

Bleak outlook in fisheries – quota in cod cut by 30% ? Export will increase significantly due to increased aluminium

production. Likely that we will see some reduction in labour demand the next

months as the market will be adjusting after the upswing the last years.

GDP growth is expected to be around 0 this year, but to pick up again and be around 2% in years 2008 and 2009, but unemployment is supposed to increase and be up to 4.5% in 2009.

Expectations of managers of the biggest companies are positive for the moment, but more doubtful looking 6 months ahead.