As was the case with the first and second quarter of 2020, the third quarter was unusual in many ways due to the effect of the Coronavirus (Covid-19) on the labour market. The impact of these factors is to some extent evident in labour force measurements. The number of employed persons in the third quarter of 2020 was 201,400 which is almost the same number of people as in the third quarter of 2019. The employment rate was 77% which is a decrease of one percentage point from 2019.
The employment rate was 77% which is a decrease of one percentage point from 2019 and has not been this low in the 3rd quarter since 2011 when it was measured 76.2%. The number of full-time employed decreased by 2,900 from the previous year and 77.5% of employed persons in the third quarter of 2020 were full-time employees which is a decrease of 1.3 percentage points from the third quarter of 2019. Of people in employment 82.4% on average were at work in the reference week of the survey in the third quarter of 2020 compared with 80.9% in 2019.
Decreasing working hours
In the third quarter of 2020, the average number of actual working hours were 39.4 per week for those that were at work in the reference week, 35.6 hours for women and 42.3 hours for men. Compared with the third quarter of 2019 the average number of actual working hours was 40.8 hours, 35.9 hours for women and 44.5 for men.
In the third quarter of 2020 the average usual working hours of workers were 39.1 hours in a usual week, compared with 40 hours in the third quarter of 2019. The main reasons for working fewer hours than ususal in the third quarter of 2020 were vacation (54.1%), working arrangements (20.3%), variable working hours (11.4%), illness (4.2%) and 9.9% cited other reasons. Only 1.4% named Covid-19 as a reason compared with 12.2% in the second quarter of 2020.
Unemployment 5.1%
The average number of persons in the labour force was 212,100 in the third quarter of 2020 according to the Icelandic Labour Force Survey, or 81.1% of the population between 16 and 74 years of age. Of these, 10,700 persons were unemployed, or 5.1%. At the same time, about 3,000 jobs were available in the Icelandic labour market according to Statistics Iceland’s job vacancy survey, or about 1.5% of jobs according to previously published figures. In comparison, 7,200 persons were unemployed in third quarter of 2019 which means that unemployment has increased by 1.6 percentage points over the period.
Within the age group 16 – 24 years old, the unemployment rate was 7.4% which is the almost the same rate as it was the year before. One of the reasons why youth unemployment remains unchanged despite labour market conditions can be explained by more young people being hired for summer jobs by municipalities and governmental organisations than in previous years.
Labour market slack still on the rise
Labour market slack reflects an unmet need for employment in excess of unemployment, reflecting both those on the labour market and those who fall outside the labour market. To count as a part of the labour force according to the definition of the International Labour Organization (ILO), an individual needs to be either employed or unemployed. The definition of unemployment in Statistics Iceland Labour Force Survey has been the same from the beginning and follows ILO definition of the labour force. Unmet need for employment reflects the group of unemployed individuals, the group of underemployed in part-time and what is called potential labour force. That is persons not in employment who are looking for a job but not available and those who are not looking but are available for work if offered.
As the figure below shows, the seasonal changes have been clear in terms of slack in the labour market. The slack has always been lowest in the third quarter of each year. The slack has been on the rise since it was lowest in the third quarter of 2018. The monthly numbers from the survey indicate that after a relatively fair summer in the labour market, the slack will likely increase in the coming months.
More employees working from home
In the third quarter of 2020, a total of 34% of employees aged 25-64 years worked remotely from home in their main job. Thereof, 5.2% were employees who usually worked from home while 28.7% sometimes worked from home. This is an increase from the previous year when 28.7% of employees worked remotely from home in their main job, 4.2% usually worked from home and 24.5% sometimes. Working remotely from home does not include domestic work or other jobs unrelated to employees’ main job.
Actual working hours for employees 25 to 64 years old in the third quarter of 2020 were 40 on average per week, 39.8 hours for employees who worked from home and 40.1 hours for those who never worked from home. Compared with the third quarter of 2019, actual hours for employees 24 to 64 years old were on average 41.2 hours per week for both those who worked from home and those who never do.
In the third quarter of 2020, employees worked 13.7 hours on average remotely from home or 33.3% of actual hours. In comparison, employees worked 6.1 hours from home, or 14.5% of actual hours, in the third quarter of 2019.
