Almost 10,000 Sign Up For Reduced Employment Benefit On The First Day

The Icelandic Labour Department received 9,670 application for reduced rate of employment benefits by 14:00 yesterday, the day registration opened, according to a statement released on the Cabinet’s website.

Last week, the government announced measures designed to support workers through the COVID-19 outbreak and encourage employers to reduce workers’ hours rather than firing them. If former full-time employees are given part-time hours during the crisis, the government will offer them unemployment benefits equivalent to their lost hours. If an employee worked 40 hours a week previously, but now only works 10 hours, their government will pay for their lost 30 hours. Provided that employees are working 25% of their pre-pandemic hours, they are entitled to combined government payouts of up to 700,000 ISK per month.

Jeff Daðason, minister for social affairs and children, stated, “Our goal with this legislation is to promote the employers maintain employment relationships with its employees as much as possible.”

So far, 48 companies have reduced the hours of over 20 employees and three companies have reduced the rate of employment of over 100 employees.

The high number of applications received by the department is a clear indicator of the disastrous effect the COVID-19 outbreak is having on the Icelandic economy. Tens of thousands more applications are expected in the days to come.

Over half the applications submitted came from tourism-related industries, particularly aviation, hospitality and catering. This is further confirmation that the large Icelandic tourism sector will be one of the worst hit by the economic implications of the COVID-19 pandemic. Icelandair and the Blue Lagoon have both fired hundreds of workers in recent days and reduced the employment rates of many others.

The government is working to support the struggling tourism industry in Iceland through the COVID-19 pandemic as numbers of visitors dwindle due to global travel restrictions and fear of infection. An initiative to issue all Icelanders over 18 with a digital gift voucher to spend on domestic tourism and investment in a national marketing campaign was announced last week. However, the amount of firings and reduced employment decisions made by employers in the sector will undoubtedly soar in coming weeks.

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.

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