From Iceland — Unemployed, Not Broke

Unemployed, Not Broke

Published October 19, 2023

Unemployed, Not Broke
Photo by
Joana Fontinha

If you ever find yourself jobless, here are quick tips to navigate the complex system

There’s no positive way to start this article – you’ve seen the news. Wars are raging across the continent, inflation is soaring and people are losing their jobs. If you find yourself on that side of the labour market, for any reason, know that there are options and supports available. We spoke with Halldór Oddsson, Head of Legal and Labour Market Issues at the Icelandic Confederation of Labour (ASÍ), to guide us through the assistance available for people who have lost their jobs.

GV: What are Iceland’s unemployment benefits? Do they vary if you’re fired or quit?

On the one hand, the system of unemployment benefits and the tasks of the Directorate of Labour is to provide you with benefits to limit the damage to your household and your bank accounts if you are unfortunate enough to lose your job. But on the other hand, it aims to rehabilitate you and assist you in finding new employment. The system is designed to push people away, but not in a bad way.

The basic benefits are about 10-15% lower than the minimum wage. Additionally, there are income-related benefits. If an applicant for unemployment benefits resigns from the job themselves, they are only entitled to the basic unemployment benefits. Moreover, they have to wait for two months before they can start receiving the benefits. 

“In a way, it’s also work to be unemployed.”

However, if a person is laid off or their contract expires and the termination of the job has nothing to do with the individual, they are entitled to income-related benefits, which are slightly higher and based on their previous income. There are exceptions: sometimes people quit for legitimate reasons such as bullying, sexual harassment, unpaid salaries, or similar issues. In such cases, they may be eligible for income-related benefits. (For up-to-date numbers, please refer to the Directorate of Labour’s website:

GV: What should one know about the application process for unemployment benefits? 

To qualify for full benefits, individuals must have worked in Iceland for at least 12 months or hold a certificate proving employment in another EEA country. This needs to be done beforehand. You must apply immediately upon losing your job; your application date determines when you start receiving benefits. It’s crucial to inform the Directorate of Labour about anything affecting your ability to attend courses, meetings, job interviews, etc. People can only receive unemployment benefits for a maximum of 30 months, but most individuals leave the system before reaching that limit. From my interactions with people here, it’s evident that most individuals want quality employment. Even those who have been receiving benefits for some time are obligated to apply for jobs, attend courses and meet with counsellors. In that way, it’s also work to be unemployed.

The rules are the same for Icelanders and foreigners, but certain aspects of the system can make it less accessible for foreigners (and Icelanders with family abroad). For example, if they want to visit their family, they have to clock out of the unemployment benefit system.

At the Confederation of Labour, we believe that in the current international labour market, there should be more flexibility within the system. With foreign workers now, if they are unfortunate to be unemployed and need to leave, say, to attend a funeral in Germany for their grandparents, they lose their right to unemployment benefits.

GV: Are there specific initiatives to help unemployed individuals find new jobs or acquire skills?

The main tasks of the Directorate of Labour, defined by the law, are to pay benefits and then assist people in getting back on their feet and back into the labour market. This can be done by informing them about available jobs, but it can also involve educating people and helping them improve themselves.

They offer basic courses, such as courses on creating a CV or conducting yourself in a job interview. For those who have been in the system for a bit longer, there are opportunities for assistance from the Directorate of Labour, such as obtaining an additional driver’s license, attending language courses, or even going to university.

The system provides many options for those genuinely seeking to be active and improve themselves. From my personal experience speaking with hundreds of unemployed people, being unemployed can be draining. People might feel humiliated, shy and lack the energy to attend courses. It’s essential to approach people right away with options because every week on unemployment benefits can lead to the danger of people staying within that system for an unnecessarily long period. It’s about finding a delicate balance between having a humane system, which is serving the citizens and assisting them in a time of need, but also considering their personal preferences and ambitions. In my opinion, nearly everyone – around 99% of people – would always choose quality employment over unemployment. 

Consult your union if you’re mistreated at your workplace. For more information about your right to unemployment benefits, visit &

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