From Iceland — Rate of Employment Plummeting In Iceland Due To COVID-19

Rate of Employment Plummeting In Iceland Due To COVID-19

Published April 2, 2020

Poppy Askham
Photo by
Art Bicnick

Employment rates in Iceland have fallen dramatically as the economic impacts of the COVID-19 epidemic begin to be felt by workers. New information released by the Directorate of Labour reveals the scale of the crisis, accompanying mass dismissals at major Icelandic firms.

In a statement released on its website, the Directorate of Labour announced that it expects unemployment figures for April to go up to 12-13%, up from 7.5-8% in March. Although the level of employment is hoped to improved later in the year, between May and September, the traditional peak season for tourism, the overall unemployment rate for the year is predicted to be 8%. For reference, unemployment last year never rose higher than 4.8% and in early 2010 at the peak of Iceland’s economic problems following the 2008 financial crash, unemployment was at 9.3%.

Several major companies have announced waves of dismissals in recent days. Notably the Blue Lagoon has laid off 164 workers and as Stundin reports, is relying on an estimated 600 million ISK in state aid to supplement the hours of around 600 of its remaining employees over the next three months. Icelandic bookstore Penninn has also announced that 90 of its staff will be laid off, over a third of its workforce.

The Directorate of Labour also revealed that it received 25,000 applications for reduced rate of employment benefits by the end of the first day. The scheme, which launched last Friday, offers workers who have had their hours reduced due to COVID-19, compensation from the government provided they are working at least 25% of their pre-pandemic hours. It is designed to encourage employers to put workers on part-time contracts rather than firing them.

The tourism industry has been hit the hardest by the economic fallout of COVID-19, due to global travel restrictions and lock-down policies. Around half of all applications for reduced employment benefits came from tourism sector workers, 22% of whom were involved in hospitality and catering and 15% in passenger transport.

The data collected by the Directorate of Labour somewhat unsurprisingly revealed that the capital area has been hit the worst by reduced rates of employment. The Suðurnes peninsula has suffered particularly badly, with 3,000 of the capital area’s 17,000 applications coming from the peninsula. Unemployment in the Suðurnes region has risen as high as 15.4%, Morgunbladid reports. The dismissal of 101 staff members at Isavia, the company which operates the Keflavík airport, has been a particular blow. Reykjanesbær has also seen unemployment rates soar, with 17% currently registered unemployed and 24% expected by the end of April.

The next few months will be a difficult time in Iceland, no doubt.

As ever, those looking for more information or advice should go to the Icelandic Government’s excellent COVID-19 help page.

Tune into our daily COVID-Cast for a deeper dive into the day’s developments.

Note: Due to the effect the Coronavirus is having on tourism in Iceland, it’s become increasingly difficult for the Grapevine to survive. If you enjoy our content and want to help the Grapevine’s journalists do things like eat and pay rent, please consider joining our High Five Club.

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