COVID-19 In Iceland: Economic Actions Target Struggling Tourism Sector

Three new COVID-19 cases were detected by the National University Hospital yesterday, bringing the total number of infections in Iceland since the start of the pandemic to 1,795. Two of the new cases are believed to be residents of Bolungarvík, the town at the centre of the Westfjords’ outbreak and the region has around 30% of the nation’s active infections.

Over 91% of patients have now recovered from the virus following thirteen more recoveries yesterday. There are still 11 patients in hospital, but for the first time in many weeks there are no patients in intensive care.

Further Economic Action Announced
The Prime Minister, Katrín Jakobsdóttir, announced three new measures worth ISK 40-60 million to help companies cope with the economic fallout of the COVID-19 pandemic. The government will continue to supplement the pay of workers who have had their hours cut, but from July only 50% of wages will be covered. The part-time work scheme was meant to expire on June 1st, but it has now been extended until August 31st. A temporary simplification of the rules surrounding financial restructuring was also announced and the government will now step in to cover the pay of dismissed workers during their notice period.

Today’s measures aim to help struggling businesses, but Katrín acknowledged that some bankruptcies are unavoidable.

The tourism industry, which has been hardest hit by the economic impacts of COVID-19, will be the principal beneficiary of the latest action package. The head of the Icelandic Tourism Association, Jóhannes Þór Skúlason, welcomed the measures, telling Visir that the government had taken “very clear action that will help us to keep the industry alive, in large part”. Mass redundancies are likely in the short term, but it is hoped that the measures will prevent the majority of businesses from declaring bankruptcy and in doing so protect jobs in the longer term.

Icelandair’s Struggles Continue
Concern about the future for Icelandair remains despite the new measures. A second wave of redundancies is expected in the coming days. Jón Þór Þorvaldsson, the chairman of the Association of Icelandic Commercial Pilots has warned that up to 90% of the current workforce may lose their jobs. Bogs Nilson, Icelandair’s CEO claims the airline will not survive the summer without a new influx of cash. He hopes to find new investors or receive state loans, Fréttablaðið reports.

Ásmundur Einar Daðason, the Minister for Social Affairs, told RUV that Icelandair will receive no special treatment from the government. The airline will have to work with its board members and share-holders to raise the necessary capital. Like any other business affected by the pandemic, the company can make use of the government’s economic aid schemes, but no special measures will be put in place to help it survive.

Delayed Hospital Operations
The head of Landspítali, Páll Matthíasson, has told Vísir that no more than 500 operations have been cancelled due to the COVID-19 outbreak. In normal times, the hospital carries out 120 to 130 operations every week, but during the pandemic this number has dropped to around 70. At the end of March the hospital decided to postpone non-urgent surgeries such as hip replacements in order to protect vulnerable patients and redirect resources towards care for COVID-19 patients. Emergency treatments for conditions such as cancer or severe heart disease have continued.

Landspítali hopes to start performing non-urgent operations again on May 4th. As the COVID-19 epidemic in Iceland subsides, the hospital is beginning to return to normal. At the height of the outbreak, four wards were dedicated to coronavirus patients, but now just two wards are required. The hospital will also reduce the number of “back-up” staff working in COVID-19 wards. 200 were temporarily hired at the start of the crisis but the number will decrease considerably in May.