The Layoffs In Fish Processing

Are the government’s fishing fees killing an industry?

The last parliament session in Iceland saw the longest-standing filibuster in that institution’s history, all because of a fisheries bill. When the fisheries bill finally passed, Fisheries Iceland (SFS) sent out a press release with an ominous final sentence: “A number of companies in the fisheries industry […] face difficult decisions in the coming months. One can hope that the authorities who set the rules have an understanding of the pain they may cause.”

Let the layoffs begin

The following month, July 2025, fisheries company Einhamar Seafood fired 16 fishermen, its CEO citing in part the new fishing fees. On August 29, 2025, 50 people were laid off at a fish processing plant in Vestmannaeyjar, population 4,400. The following Tuesday, CEO of Vinnslustöðin, Sigurgeir Brynjar Kristgerisson told RÚV: “[The government] can not wash their hands of this, which is that 50 innocent individuals were laid off as a part of efficiency measures that were brought about because of the fishing fees.”

The chairman of Fisheries Iceland (SFS) told Vísir on August 29, the day of the firing in Vestmannaeyjar, that it was likely that more companies in the fishing industry will lay off workers in the foreseeable future because of the hike in fishing fees, though he did hedge his bet by pointing out that other factors might also influence such layoffs.

Decades of layoffs

In 1995, 9,000 people worked in fish processing in Iceland. In the subsequent 30 years, this number has been in decline, with 4,000 fewer people registered as working in fish processing by Statistics Iceland during the past decade. Last year, the number was 3,200. As the numbers indicate, the fish processing business wasn’t exactly booming before the law was passed.

Viðreisn MP Eiríkur Björn Björgvinsson points out that “fishing companies in Iceland have been streamlining their operations for many years without linking it to fishing fees or changes to them, and it is important to keep in mind that the changes [as introduced by the new law on fishing fees] will not take effect until next year.”

Eiríkur, who oversaw the new law on fishing fees, goes on to say that “it was foreseeable that some fishing companies and companies serving the fishing industry in Iceland would aim for streamlining their operations before the debate on changes to fishing fees began, and that they would blame the changes.”

The trend Eiríkur is referring to is evident. Vinnslustöðin in Vestmannaeyjar, whose staff of 50 was just fired, had been reporting losses in 2024 and 2023, prior to the new law. Other layoffs before the law changed include Ísfélagið, which laid off 34 employees in their fish processing plant in Þorlákshöfn last year, the delayed result of a merger that happened two years earlier and a subsequent reorganisation.
“Fishing companies in Iceland have been streamlining their operations for many years without linking it to fishing fees or changes to them.”

Two years ago, Brim hf., one of the biggest fishing quota holders in Iceland, closed the fish processing of one of its subsidiaries in Hafnarfjörður, firing 31 people. In a press release, they pointed to reduced catch of cod, competition from foreign fish processors in purchasing raw material for processing on the domestic market, along with significant cost increases, both domestically and abroad.

Technological innovation in the fish processing industry, pioneered by local companies such as Marel hf, has decreased the number of workers in processing while increasing quality. Additionally, advances in cooling, freezing and storing of processed and unprocessed fish has made it possible to ship unprocessed fish abroad to be processed closer to their final market destinations without affecting the quality of the fish. This has led to increased export of unprocessed fish. This means that local fish processors now have to compete with fish processing companies abroad for Icelandic fish.

Gunnar Örlygsson, the CEO of IceMar, an independent fish processor, told Morgunblaðið in April that “It has become untenable to compete with fish processing in Europe, where wages are much lower and government subsidies are correspondingly significant.”

Accelerating a trend

This means that laying these layoffs in the fish processing sector solely at the feet of the current government, as both SFS and Vinnslustöðin are doing, is an incomplete argument. Layoffs in the sector were already a trend. However, it is possible that the increased fishing fees are now speeding up this trend, which might result in some smaller municipalities around the country being hit, and hit fast, thus giving them less time to adapt to a changed reality, similar to the effect brought on by the 1980s quota system.

While independent fish processors may suffer from the multiple factors discussed here, this might not be terrible news for some of the bigger fisheries companies in Iceland, who not only own fishing quotas and fish processing facilities in Iceland but have in many cases diversified their operations by buying fish processing plans on mainland Europe, in places such as Poland and Portugal. The larger companies have also used their profits in recent years to diversify their holdings well outside of the fishing industry, or as Eiríkur points out, “the Icelandic fishing industry has been one of the most profitable industries in the country for many years, with many companies paying themselves enormous dividends, and some owners using those dividends to invest in entirely unrelated operations.”

For these fishing conglomerates, shutting down processing in Iceland and moving more of the processing to their plants in Europe where it is cheaper, may now simply look like a good business decision, potentially with a better profit margin.

Decreased revenue

A decline in fish processing will not only result in fewer jobs in Iceland, or less tax revenue; processed fish is a much more valuable product than unprocessed fish. If the proportion of fish exported unprocessed increases, the value in stone-cold ISK created within the Icelandic economy will correspondingly decline.

The government’s recent law changes have been popular, and the parliamentary filibuster this spring to try to stop the tax increase on the fishing industry becoming law was immensely unpopular. What remains to be seen though is whether or not the bottom line of the government’s new tax increase might actually be significantly lower in the coming years than intended, with the potential loss of revenue from fisheries-related jobs, export value and related service industries.