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Employment - General

  • Iceland normally has little unemployment, about 3%.​
  • The Covid-19 epidemic came with an immense increase in unemployment, especially among people of foreign extraction. In part this may be attributed to the fact that many foreign nationals were working in the tourism and food service industries, and jobs in these industries largely vanished. ​
  • Citizens of EEA (European Economic Area) states do not require a work permit in Iceland.​
  • All workers must have an identification number and a legal domicile registered in the civil status records. www.


Benefit for society

  • It is important for everyone in society to have a strong economy. ​
  • The greater the number of people who are working in the labour market, the higher the revenue for the state and municipalities in the form of taxes. ​
  • Tax revenue is used to fund schools, health care, hospitals, to construct roads, pay social benefits and countless other things. ​
  • More people working also means that fewer public funds are used for expenses such as unemployment and other social benefits. ​


Benefit for individuals

  • For most adult people it is very important to be gainfully employed. ​
  • Employment provides:​
    • Financial flexibility.​
    • A more fulfilling daily life.​
    • Social status and connections.​
    • Potential for making use of one's talents.​
    • Rights and benefits in various areas.​
    • An opportunity to contribute to society. ​


Rights and obligations in the labour market

  • Laws are established by Parliament and specific legal provisions apply to all employers and employees. ​
  • All employers have an obligation to abide by the legislation that applies to hiring and wage contracts, work hours, absence from work, health, security and working environment. ​
  • Employees also have obligations, including the responsibility to perform their duties in a satisfactory manner, and shall contribute their efforts towards creating a good working environment and participate in organised work in connection with safety and environmental matters in the workplace. ​
  • Employees (through labour unions) and employers enter labour contracts with each other. Specific agreements are made for specific sectors of the economy. ​
  • Employees accrue rights in proportion to how long they have been employed and active on the labour market. ​
  • Both seniority and chronological age are important factors about various rights, e.g., the length of paid summer holidays. ​
  • Rights such as holidays, reimbursement for studies, sick leave, pension fund payments due to sickness and unemployment benefits are assessed based on age and rights accrued. ​
  • Parental leave fund payments depend on the duration and extent of employment on the Icelandic labour market

(minimum 6 months of employment before the birth of a child). ​

  • It is also possible to apply for a parent's allowance, but this is a small amount. ​

Trade union - What's that?

  • Employees on the labour market are members of specific trade unions. ​
  • Some trade unions are profession-specific, i.e., only open to people who belong to one particular profession, such as the Icelandic Medical Association. ​
  • The largest trade unions in Iceland are open to multiple occupational groups. VR, Efling and Sameyki are the largest trade unions. ​
  • Trade unions negotiate with employers regarding wages, work hours and benefits on behalf of their members. ​


Trade unions – Benefits for members

  • The purpose of trade unions is primarily to work towards improved conditions and increased rights for their members. ​
  • Trade unions own summer cottages and vacation apartments all over the country, and these are available for members to rent for a few days for little money. Many trade unions offer traveller's cheques for purchase that can be redeemed for a higher amount when buying air fare tickets. ​
  • It is wonderful to be able to go off on vacation to enjoy beautiful surroundings and relax. Everyone has the right to lease a summer vacation house or a vacation apartment. The houses are equipped with all facilities and usually a hot tub. ​
  • Trade unions also run education and sickness funds which members can draw on for studies or expenses in relation to for instance Icelandic language courses, physical fitness programs, physiotherapy, psychology costs or to pay for eyeglasses. ​
  • The rules that apply to these funds vary between unions. ​
  • Trade unions also pay some of the expenses of medical accommodation for people living outside the capital area who must come to Reykjavík for medical treatment. ​
  • Everybody can look to their trade union for assistance if they are uncertain about the extent of their rights or if they believe their rights have been violated (e.g., about wage contracts). ​
  • Union members pay union dues, a low membership fee. This is deducted from their wages. ​
  • Union membership is not mandatory but it comes with undeniable benefits. ​
  • People who are dismissed from employment can keep paying their union dues and maintain their rights. ​
  • The Icelandic Confederation of Labour is the largest cross-industry organisation for wage earners in Iceland.
  • Trade unions are members of the Confederation. The Icelandic Confederation of Labour is a forum for membership organizations to cooperate with each other and interacts with government authorities and the Confederation of Icelandic Enterprise on their behalf in matters that jointly concern them.


​Shop steward – what's that?

  • A shop steward is a contact person between employees and the union and employer. ​
  • The shop steward is an employee elected by his/her fellow employees and has an obligation of confidentiality towards them. ​
  • Among the shop steward's tasks are sharing information issued by the trade union and to be available to answer inquiries from employees regarding information and assistance related to the rights and obligations of employees. ​
  • If you think that your rights are being violated at work, seek out the shop steward in the workplace or go directly to your trade union. ​


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