Economic Inequality In Iceland Rising

Iceland’s economic forecast is positive in the short term, but economic inequality is very much a reality, and on the rise.

Vísir reports that, according to a new economic report from the Icelandic Confederation of Labour (ASÍ), the Icelandic economy is looking fairly positive in the short term: growth is expected to continue, the króna should strengthen, and unemployment should remain low. At the same time, the housing market is cause for concern, but Iceland’s economic problems run deeper than this.

Economic inequality, ASÍ contends, hit its high point in 2008, declined after the economic collapse, but has been steadily rising again over the past three years.

For example: just 20% of Icelanders comprise half of the disposable income in Iceland. More striking, the richest 10% in Iceland own two-thirds of all the assets in the country.

The major contributing factors have included the ways in which the current ruling coalition of the Progressive Party and the Independence Party have changed tax laws. The tax burden on the middle class has increased over the past four years, while taxes on the highest income earners have lowered. Fees levied on Iceland’s fishing companies were also lowered, and the so-called “debt correction” benefited high income earners most of all.

“Unfortunately, we see indications in our recent findings that we haven’t done a good job in distributing well-being to everyone,” Henný Hinz, an economist for ASÍ, told reporters. “This evidence that inequality has been on the rise again, and the assets of the highest income earners has recovered far beyond other groups.”