The number of unemployed in March was around 5,900 according to the Icelandic Labour Force Survey, or 3.3% of the labour force. Seasonally adjusted activity rate was 79.0% while the seasonally adjusted rate of employed persons was 76.9%.

Based on the unadjusted measure the average estimated number of active persons aged 16-74 years of age was 205,100 in March 2020. That is equivalent to an activity rate of 78.3% (±2.6). Of active persons, it is estimated that about 199,600 (±5,300) persons were employed while 5,700 (±2,100) persons were considered unemployed and looking for a job. The share of employed persons of the population was estimated to be 76.2 (±2.7) while the unadjusted unemployment rate was 2.7% (±1.0).

When the present unadjusted measure of unemployment is compared to that in 2019, it may be observed that unemployment decreased by 0.2 percentage points (which is not a statistically significant decrease) and the rate of employed persons by 3.3 percentage points. Moreover, the activity rate has decreased by 3.5 percentage points.

All numbers are weighted by age and gender and rounded to the nearest hundred.

Table 1. Labour market in Feburary unadjusted measures
CI CI CI
  2018 (±95%) 2019 (±95%) 2020 (±95%)
Total 1674 years
Activity rate 81.4 2.0 81.8 2.6 78.3 2.6
Employment rate 79.6 2.4 79.5 2.5 76.2 2.7
Unemployment rate 2.3 0.8 2.9 1.3 2.7 1.0
Hours of work 38.7 1.1 39.6 1.3 38.2 1.3
Labour force 203,100 5,100 208,400 6,700 205,100 6,700
Employed 198,500 4,600 202,500 5,000 199,600 5,300
Unemployed 4,600 1,500 6,000 2,600 5,700 2,100
Inactive 46,300 5,300 46,300 6,200 56,800 6,100
Est. population 249,400 254,700 261,900
Table 2. Labour market last 6 months seasonal adjustment
 Oct-19Nov-19Dec-19Jan-20Feb-20Mar-20
Total 1674 years
Activity rate 81.1 80.5 80.7 81.0 80.4 79.0
Employment rate 78.1 77.4 77.6 78.0 77.5 76.9
Unemployment rate 3.4 4.1 3.9 3.4 5.0 3.3
Hours of work 40.4 40.3 39.9 39.6 39.4 38.4
Labour force 210,200 205,800 209,100 208,700 208,500 208,300
Employed 202,800 198,200 202,200 202,700 199,600 202,200
Unemployed 7,100 7,100 7,300 7,000 10,300 5,900
Inactive 47,500 52,600 49,700 50,400 51,000 53,300
Est. population 257,900 258,400 258,900 259,100 259,600 261,800

Uncertainty in the labour market
March was an unusual month in the Icelandic labor market, as many workplaces closed following a ban on gatherings in mid-March, and as the law on reduced employment rates came into effect on March 21st . Since then, uncertainty has characterized the labour market. This uncertainty affects the measurement of Statistics Iceland's Labour Force Survey in two ways.

First, is should be noted that a distinction is made between ambiguous employment and unemployment in the Labour Force Survey. In order to be considered unemployed in the Labour Force Survey a person must be 1) unemployed, 2) active in a job search (systematically looking for work) and 3) able to start working within two weeks. It is not obvious that individuals who are unemployed, or are unsure of their employment, will immediately start looking for a new job when there is uncertainty in the labour market - as it is now. At the same time, it is unclear whether persons seeking employment consider themselves as ready to begin work within a short period of time if their relationship with a former employer is ambiguous. Therefore, it cannot be assumed that those who experienced a lack of job security in March 2020 fulfill all the conditions of being unemployed as defined by the Labor Force Survey.

Second, changes that happen in the latter part of a month can be difficult to measure. The Labour Force Survey data collection is conducted weekly by telephone in which respondents are asked about their position in the labour market in a specific reference week. Reference weeks are spread throughout the month so that the respondents are asked about their status every week of the year, broken down by month. About half of the data for the Labour Force Survey for March was collected during the period of March 1st to 15th - or before tougher measures and legislation were introduced in the Icelandic labour market. Therefore, people who were in full-time employment according to the Labour Force Survey in the first half of March may be registered as unemployed by the end of the month, in part or in full.

Labor Force Survey data, however, shows that unemployment has risen in the last two weeks of March, as well as in the first weeks of April, indicating an increase in unemployment.

The transfer from work to registered unemployment can be seen by comparing figures from the Labour Force Survey and the Directorate of Labour Registry. It can be seen that 3,100 people are estimated to be employed according to the Labour Force Survey, which are then included in the unemployment registry at the Directorate of Labour at the end of March. It can also be seen that 21,700 people are estimated to be employed according to the Labor Force Survey but are registered as unemployed at the Directorate of Labor by the end of March.

Table 3. Comparison of Labour Force Survey numbers and Directorate of Labour numbers on the labour market
  Directorate of labour - end of month
  Not in Register Reduced empl. ratio Unempl. Register Total - LFS
 
Status in LFS    
Inactive 53,900 1,000 1,900 56,800
Unemployed 3,300 0 2,200 5,600
Employed 174,800 21,700 3,100 199,600
Total 232,000 22,600 7,300 262,000
Percentage of LFS    
Inactive 94.8 1.7 3.4 100
Unemployed 60.0 0.0 40.0 100
Employed 87.6 10.9 1.6 100
Total 88.6 8.6 2.8 100
Percentage of DOF    
Inactive 23.2 4.4 26.6 21.7
Unemployed 1.4 0.0 30.7 2.1
Employed 75.3 95.6 42.7 76.2
Total 100 100 100 100

Labour market status
Figures on people on the labor market, as published here, are based on the International Labour Organization (ILO) definition. Over the years, these figures have provided important clues on economic development and labour market policies. However, it is clear that they do not tell the whole story and do not measure the sudden fluctuations in the labour market that have occurred in recent weeks in a timely manner. In order to shed light on these changes, a more detailed and specific analysis of the people´s labour market status is needed.

It is interesting to focus on people whose employment status is ambiguous. On the one hand, these are people who can be said to be on the verge of unemployment and paid employment and, on the other, those who, according to the ILO, are defined to be inactive and may also be considered unemployed.

Those who are on the verge of unemployment and paid work may be called underemployed. These are part-time workers who want to work more. Others are outside the labour market but may also be considered to be unemployed. These are two groups of people; 1) people searching for job who cannot start working within two weeks and 2) people who are not looking for work but are ready to work if given the opportunity. According to the ILO definition, these people are not considered part of the workforce, but could be regarded as an additional workforce that could potentially become part of the workforce if circumstances permit.

The people in both of these groups have in common the fact that they say they contribute less to the labour market than they would like to or are able to. It can be said that these groups of people constitute underutilized workforce. Although these people are not considered unemployed according to the ILO definition, their position nevertheless reflects a lack of employment, a good example being people who do part-time jobs because a full job is not available to them.

In order to shed light on the underutilized and additional labor force, Statistic Iceland put toghether figures that are otherwise published annually and quarterly by months. These figures show that in March 2020, the proportion of unemployed, unemployed or additional labour force is 8.9% of the estimated population of people 16-74 years of age.

Table 4. Comparison of the rate of underemployed and potential additional labour force by years
  March 2018 March 2019 March 2020
  Conf.int. Est. Conf.int. Est. Conf.int. Est.
Percent (±95%) Pop.Percent (±95%) Pop.Percent (±95%) Pop.
Inactive                  
Inactive - total 18.8 1.9 248,600 18.2 2.3 255,200 21.7 2.4 262,000
Other inactive 82.2 4.9 46,700 87.8 5.1 46,500 88.0 4.4 56,800
Person available to work but not seeking 9.6 3.6 46,700 5.8 3.5 46,500 8.9 3.9 56,800
Persons seeking work but not available 8.2 3.4 46,700 6.4 4.1 46,500 3.0 2.4 56,800
Active                  
Activity rate 81.2 1.9 248,600 81.8 2.3 255,200 78.3 2.4 262,000
Labour force + additional 84.6 1.8 248,600 84.0 2.1 255,200 80.9 2.3 262,000
Unemployed                  
Unemployment rate 2.2 0.9 201,900 2.9 1.4 208,800 2.7 1.3 205,100
Unemployed of total population 1.8 0.7 248,600 2.4 1.1 255,200 2.1 1.0 262,000
Additional labour force 3.3 1.0 248,600 2.2 1.0 255,200 2.6 1.0 262,000
Unemployed, additional and underempl. 8.9 1.6 248,600 7.0 1.7 255,200 7.8 1.8 262,000
Employed                  
Employment rate 79.4 2.0 248,600 79.4 2.5 255,200 76.2 2.5 262,000
Underemployed 4.7 1.3 197,400 3.0 1.2 202,700 4.0 1.5 199,600
Other in part-time 18.9 2.4 197,400 22.3 3.0 202,700 21.6 2.9 199,600
Full-time - temporary 3.4 1.2 197,400 3.1 1.4 202,700 2.8 1.4 199,600
Full-time - temporary 73.0 2.6 197,400 71.6 3.1 202,700 71.6 3.1 199,600

About the data
The Labour Force Survey in March 2020 covers 4 weeks, from March 2nd 2020 through March 29th 2020. A random sample of 1,533 persons 16–74 years old domiciled in Iceland were randomly selected. Excluding those who were deceased or residing abroad the net sample was 1,499 persons. A total of usable answers were obtained from 981 individuals, corresponding to a 65.4% response rate.

Statistics