The number of 16-74 years old individuals active in the labour market was estimated to be 209,500 (± 6,700) in May 2020, based on monthly measures from the Icelandic Labour Force Survey, equivalent to an activity rate of 80.9% (±2.6). Of active individuals, the number of employed individuals was estimated to be 188,800 (±5,300) and 20,800 (±3,800) unemployed and looking for a job. The rate of employed individuals of the population was estimated to be 72.9% (±2.8%) and the unadjusted employment rate was estimated to be 9.9% (±1.8).

Comparing the unadjusted measures from May 2020 to measures from the past two years shows an increase in the unemployment rate by 3.9 percentage points from May 2019 and 6.9 percentage points since May 2018. The number of unemployed individuals increased by 8,000 individuals from 2019 and by 14,600 from 2018. The employment rate is 4.2 percentage points lower than in May 2019 and 7.4 percentage points lower than in May 2018.

Similar unemployment rates not been seen since 2009-2011
An increase in the unemployment rate is commonly seen during spring in Iceland, especially in May. The main cause is an increase in demand from young people seeking employment when school ends. In May 2020, the ratio of 16-24 year olds out of the total number unemployed individuals was 40.4% and the unemployment rate 23.3%. The effects of Covid-19 are evident in May 2020 despite the general seasonal increase in unemployment rate. Similar unemployment rates have not been seen since 2009-2011, when the unemployment rate increased following the financial crisis in 2008. The unemployment rate in March, when the effects of the epidemic were first notable in Iceland, was 3.3% and the unemployment rate has increased by 6.6 percentage points since.

The seasonally adjusted results in May show the number of unemployed to be 14,300, which is equivalent to 5.9% of the labour force. Seasonally adjusted activity rate was 79.5% and the employment rate 72.8%. The seasonally adjusted activity rate increased by 4 percentage points from April 2020 and the employment rate by 2.6 percentage points. The seasonally adjusted average hours worked were 36.7 in May which is a 3.2 hour decrease from December 2019 and the lowest seasonally adjusted average hours worked in the history of the continuous Icelandic Labour Force survey since 2003.

The seasonally adjusted trend of the rate of unemployment for the last six months increased from 3.8% in December 2019 to 4.5% in May. Concurrently, the seasonally adjusted trend of employment rate decreased by 0.4 percentage points and the activity rate by 0.8 percentage points.

It is proper to note that the seasonally adjusted estimates may be somewhat inaccurate as a result of unprecedented circumstances in the labour market in the spring of 2020. The seasonally adjusted estimates correct for general seasonal changes in the labour market, such as the increase of unemployment for young people in springtime due to students looking for summer jobs. It is evident that in the spring of 2020 such adjustments are insufficient because of the present extraordinary labour market situation. Thus, it is important to focus on the unadjusted measures when estimating short term effects.

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

Table 1. Labour market in May — unadjusted measures
CI CI CI
  2018 (±95%) 2019 (±95%) 2020 (±95%)
Total 16–74 years
Activity rate 82.7 2.2 82.0 2.1 80.9 2.6
Employment rate 80.2 2.1 77.0 2.4 72.9 2.8
Unemployment rat 3.0 1.1 6.1 1.5 9.9 1.8
Hours of work 39.7 1.1 40.7 1.0 37.5 1.2
Labour force 204,500 5,400 210,600 5,400 209,500 6,700
Employed 198,300 4,100 197,800 4,700 188,800 5,300
Unemployed 6,200 2,200 12,800 3,100 20,800 3,800
Inactive 42,700 5,100 46,200 5,300 49,500 6,200
Est. population 247,200 256,800 259,000
Table 2. Labour market last 6 months seasonal adjustment
 Dec-19Jan-20Feb-20Mar-20Apr-20May-20
Total 1674 years
Activity rate 80.7 81.0 80.4 79.0 75.479.5
Employment rate 77.6 78.0 77.5 76.9 70.272.8
Unemployment rate 3.9 3.4 5.0 3.3 5.35.9
Hours of work 39.9 39.6 39.4 38.4 37.336.7
Labour force 209,100 208,700 208,500 208,300 195,400203,700
Employed 202,200 202,700 199,600 202,200 183,200190,500
Unemployed 7,300 7,000 10,300 5,900 11,30014,300
Inactive 49,700 50,400 51,000 53,300 61,70055,400
Est. population 258,900 259,100 259,600 261,800 258,500259,500
Table 3. Labour market last 6 months seasonal adjustment trend
 Dec-19Jan-20Feb-20Mar-20Apr-20May-20
Total 1674 years
Activity rate 80.7 80.9 81.1 80.1 80.1 79.9
Employment rate 77.6 77.9 77.6 77.0 77.0 77.2
Unemployment rate 3.8 3.7 4.0 3.6 4.1 4.5
Hours of work 40.1 40.0 39.8 39.5 37.5 37.3
Labour force 208,900 209,400 209,300 209,000 206,900 207,100
Employed 201,200 202,600 201,000 202,000 198,500 196,300
Unemployed 7,200 7,300 8,100 7,500 8,500 9,200
Inactive 49,800 49,700 50,300 52,200 56,400 56,700
Est. population 258,900 259,200 259,600 261,800 260,600 259,900

About the data
The Labour Force Survey for May 2020 covers 4 weeks, from May 4th through May 31st. The sample consisted of 1,530 individuals 16-74 years old, domiciled in Iceland. When those who were domiciled abroad or deceased had been excluded, the net sample consisted of 1,496 individuals. Usable answers were obtained from 960 individuals, which corresponds to 64.2% response rate.

Statistics