In 2025, an average of 235,900 individuals aged 16 to 74 were active in the Icelandic labour market, corresponding to an activity rate of 81.4%. This represents an increase of 1,000 persons compared with 2024. Despite this increase in absolute numbers, the activity rate decreased by 0.8 percentage points year on year.
The activity rate among women was 78.1%, which is almost unchanged from 2024. Among men, the activity rate measured 84.4% in 2025, compared with 86.2% in the previous year.
Employment rate 77.8%
In 2025, an average of 225,700 individuals aged 16 to 74 were employed, a decrease of around 1,300 persons compared with 2024. The employment rate measured 77.8%, down from 79.5% in 2024. It is estimated that women accounted for an average of 105,000 employed persons in 2025, corresponding to an employment rate of 74.8%, while number of men was around 120,700, or 80.7%.
The sample size of the Labour force survey is not sufficient to provide further breakdowns for the category of non-binary. However, according to PAYE tax records, an average of 102 individuals registered as non-binary (as recorded in the National Registry) were employed in 2025.
Education and employment
Development over the past twenty years clearly highlight the relationship between educational attainment and employment in the Icelandic labour market. The share of employed persons aged 25 to 64 with tertiary education has increased substantially over this period, rising from 30.5% in 2005 to 49.0% in 2025. For the same period, the share of individuals with only basic education has decreased significantly, from 30.4% in 2005 to 17.2% in 2025. The share of those with vocational and/or upper secondary education has also decreased, from 39.0% to 33.6%.
Unemployment rate 4.3%
On average, 10,300 individuals were unemployed and actively seeking work in 2025, corresponding to 4.3% of the labour force. For comparison, an average of 7,900 persons were unemployed in 2024, or 3.3% of the labour force. In 2025, the unemployment rate was nearly identical for both women and men, measuring just over 4.3% for women and just under 4.4% for men.
When examined by age groups, unemployment rate in 2025 was highest among individuals aged 16 to 24, measuring 9.2%. Among those aged 25 to 54, the unemployment rate was 4.0%, and 1.5% for individuals aged 55 to 74. For comparison, unemployment rate in 2024 was also highest in the youngest age group, at 8.5%. The rate among persons aged 25 to 54 measured 2.6%, while the rate for those aged 55 to 74 was 1.8%.
In 2025, unemployment was higher in the capital region than in other regions, at 4.9% compared with 3.2%. A similar pattern was observed in 2024, when unemployment measured 3.7% in the capital region and 2.8% for other regions. Actual working hours 35.9
In 2025, individuals at work averaged 35.9 actual working hours per week. A year‑on‑year comparison shows that weekly working hours were 24 minutes shorter than in 2024, when they averaged 36.3 hours. In 2025, women worked an average of 32.6 hours per week and men 38.6 hours, compared with 32.8 hours for women and 39.2 hours for men in 2024.
People living outside the capital region worked more hours on average than those living within the region. In 2025, the average number of actual hours was 34.5 hours per week in the capital region, compared with 38.4 hours for those living in other regions. There is not statistically significant difference between regions in the year‑on‑year change for actual hours.
Difference between actual and usual hours
When respondents were asked how many hours they usually work in a regular workweek, the average for 2025 was 37.7 hours, which is 1 hour and 48 minutes more than the average number of the weekly actual hours. Since 2021, this discrepancy has been similar, around or just above one and a half hours, where people’s assessment of their usual working hours consistently exceeds their actual hours.
Measurements from the Labour Force Survey prior to 2021 indicate an opposite pattern, with actual hours exceeding respondents’ estimates of usual hours. One possible explanation for this shift is that in 2021 the questions on actual hours were revised, introducing more detailed questions about working‑time arrangements.
Another potential explanation is that respondents have not fully adapted to the shorter workweek, resulting in higher reported usual hours compared with actual hours worked.
Response rate
The annual sample for the Labour Force Survey is drawn quarterly from the National Registry and allocated evenly across all weeks of each quarter throughout the year. Each quarterly sample consists of approximately five thousand individuals aged 16 to 74, and the combined sample size for 2025 was 20,683 individuals. In total, 9,682 responses were collected over the year, corresponding to a 46.8% response rate. The response rate among women was 47.8%, while the rate among men was 45.9%.