3. THE CURRENT STATE OF THE ICELANDIC LABOUR MARKET
3.5. U NEMPLOYMENT
From 2007, real wages have decreased significantly as a result of an exploding inflation rate from an annual average of approx. 5% in 2007 to an inflation rate exceeding 18% annually average for December 2008 and January 2009.
Figure 3-13: Unemployment rates
Source: Eurostat. The unemployment rate is calculated by dividing the number of unemployed persons by the total number of persons in the labour force aged 15 to 74. Please note that the age group used for Iceland is 16 to 74.
Increasing unemployment is a general issue all across the European Union. As illustrated in Figure 3-13, the average unemployment rate for the EU27 exceeds the unemployment rate for Iceland.
However, it should be noted that compared to the benchmark countries the unemployment rate has increased at a higher speed in Iceland the past few years.
We have already seen that the crisis in Iceland affected the participation rate for men more than for women. This trend can be seen in the following two figures below showing the unemployment rates of women and men.
Figure 3-14: Unemployment rates among women
Source: Eurostat. The unemployment rate is calculated by dividing the number of unemployed females by the total number of females in the labour force aged 15 to 74. Please note that the age group used for Iceland is 16 to 74.
2 3 4 5 6 7 8 9 10
2006 2007 2008 2009
%
European Union (27 countries)
Sweden
Malta
Iceland
Denmark
2 3 4 5 6 7 8 9 10
2006 2007 2008 2009
%
European Union (27 countries)
Sweden
Malta
Denmark
Iceland
Figure 3-15: Unemployment rates among men
Source: Eurostat. The unemployment rate is calculated by dividing the number of unemployed males by the total number of males in the labour force aged 15 to 74. Please note that the age group used for Iceland is 16 to 74.
Generally, in all benchmark countries more men have lost their jobs than women have. In Iceland, however, this development is especially pronounced. As mentioned above, the key explanatory fac-tor for this development is that the male-dominated occupations have been more affected by the crisis compared to typical female-dominated occupations. Another explanation is that more women have become part-time employed.
A major issue for Iceland as well as for the benchmark countries is the increasing youth unemploy-ment.
Figure 3-16: Youth unemployment rate
Source: Eurostat. The youth unemployment rate is calculated by dividing the number of unemployed persons by the total number of persons in the labour force aged 15 to 24. Please note that the age group used for Iceland is 16 to 24.
From 2007 to 2009, the Icelandic unemployment rate for persons aged 16 to 24 increased by 8.9 percentage points reaching 16% in 2009. This is not as high as the average unemployment rate for the EU27 as a whole, but the increase in the unemployment rate is more pronounced in Iceland.
Conversely, the senior group aged 55 to 74 has been far less affected by the crisis. Hence, the un-employment rate for this group in Iceland increased only by 2.3 percentage points from 2007 to 2009 from 1.1% to 3.4%.
2 3 4 5 6 7 8 9 10
2006 2007 2008 2009
%
European Union (27 countries)
Sweden
Iceland
Malta
Denmark
5 10 15 20 25 30
2006 2007 2008 2009
%
Sweden
European Union (27 countries)
Iceland
Malta
Denmark
We have already seen that the employment rate decreased most significantly for people with pre-primary, primary and lower secondary education as their highest level of education compared to the other educational groups. This difference between the three educational groups is illustrated in Fig-ure 3-17. The unemployment rate is higher among persons with a low degree of education and the increase in the unemployment rate has been more pronounced during the crisis. While the unem-ployment rate increased by 3.1 percentage points from 2007 to 2009 for persons with a tertiary edu-cation; the unemployment rate increased by 6.7 percentage points for persons with a low degree of education in the same period. The reason for this development has already been discussed in Sec-tion 3.2.
Figure 3-17: Unemployment rate by highest level of attained education
Source: Statistics Iceland. The unemployment rate is calculated by dividing the number of unemployed persons by the total number of persons in the labour force aged 16 to 74. Please note that the source of the unemployment rate for ISCED level 0-2 (pre-primary, primary and lower secondary education) is Eurostat.
A major issue in the aftermath of an economic crisis is the long-term unemployment. Figure 3-18 illustrates the development in the unemployment rate in Iceland for persons who have looked for a job for 12 months or more.
Figure 3-18: Unemployment rate by duration of search for job – 12 months or more
Source: Statistics Iceland
From 2009 to 2010, the share of long-term unemployed persons increased significantly even though the average unemployment rate only increased from 7.2% in 2009 to 7.6% in 2010. This is a result
0 2 4 6 8 10 12
2006 2007 2008 2009
%
Pre-primary, primary and lower secondary education
Upper secondary and post-secondary non-tertiary education
Tertiary education
0 5 10 15 20 25
2006 2007 2008 2009 2010
%
of the many people who lost their jobs in 2008/2009 at the height of the crisis, who have not found a new job yet. In real persons, the number of long-term unemployed increased by 1,900 persons from 2009 to 2010.
A final aspect in this context is the geographical distribution of unemployment. As illustrated in Figure 3-19, the economic crisis has affected all Icelandic regions resulting in increasing unem-ployment rates. However, the unemunem-ployment rate has grown more in Reykjavík compared to the other regions of Iceland.
Figure 3-19: Unemployment rates in Icelandic regions
Source: Statistics Iceland. Capital region: Reykjavík, Kópavogur, Seltjarnarnes, Garðabær, Hafnarfjörður, Sveitarfélagið Álftanes, Mosfellsbær and Kjósahreppur. Reykjavík – Capital: - Reykjavík. Surrounding Reykjavik: Kópavogur, Seltjarnarnes, Garðabær, Hafnarfjörður, Sveitarfélagið Álftanes, Mosfellsbær and Kjósahreppur. Other regions: Southwest, West, Westfjords, Northwest, Northeast, East and South.
2 3 4 5 6 7 8 9
2006 2007 2008 2009
%
Reykjavík - Capital Capital region
Surrounding Reykjavik Other regions