One half of full-time employees earned between 570 and 749 thousand ISK per month. About one in ten employees had regular monthly earnings below 400 thousand ISK and the same ratio had over one million ISK. About half of employees had total monthly earnings between 570 and 908 thousand ISK, with the average of 794 thousand ISK. Average total earnings for full-time employees were 670 thousand ISK in the year 2020.
Comment: The y-axis show the probability of having the wage reflected on the x-axis.The line represent the median. Regular earnings are the remuneration for regular working hours, i.e. ordinary working hours according to collective agreements. Total regular earnings are the total remuneration per month including overtime.
Earnings and their distribution varied greatly by economic activity, with the highest average total monthly earnings in Financial and insurance activities (K) and Electricity and steam supply (D) in the year 2020, a little less than one million ISK. The lowest total monthly earnings were in Accommodation and food services (I), with an average of 597 thousand ISK. The distribution of earnings was greatest in Financial and insurance activities (K), but smallest in Accommodation and food services (I), which can largely be explained by different composition of occupations in the two sectors. In Financial and insurance activities (K) about two thirds of employees worked in specialist or technician occupations, while over half of the employees in Accommodation and food services (I) were in service and general worker occupations, such as cleaners.
Note that earnings in economic activities within the public administration can include back-dated pay increases or lump-sums, because the collective agreements for employees in public admininstration were not renewed in 2020, but in 2019 when earlier agreements expired.
Comment: The rectangle is defined by the lower and upper quartile and divided by the median. The bars are defined by the 1st and 9th decile. Manufacturing (C), Electricity, gas, steam, and air conditioning supply (D), Water supply; sewerage, waste management and remediation activities (E), Construction (F), Wholesale and retail trade; repair of motor vehicles (G),Transportation and storage (H), Accommodation and food services (I), Information and communication (J), Financial and insurance activities (K), Public administration and defence; compulsory social security (O), Education (P), Human health and social work activities (Q).
Different distributions of total monthly earnings for professions or occupation groups can be explained by the composition of occupations within the occupation groups. Clerks and office workers had the smallest distribution of all professions, with 80% of total monthly earnings ranging from 444 thousand ISK to 789 thousand ISK. Total montly earnings of managers, however, had the largest distribution, with 80% of their total monthly earnings ranging from 725 thousand ISK to 1.9 million ISK. The large distribution is mostly due to the vast variety of occupations in that particular profession, as the group of managers can include both top executives and division managers.
Comment: The rectangle is defined by the lower and upper quartile and divided by the median. The bars are defined by the 1st and 9th decile. Managers (1), specialists (2), technicians (3), clerks (4), service workers (5), craft workers (Craft), general workers (General).
Changes in composition affect earnings
Earnings in the lower deciles increased more between 2019 and 2020 compared with higher deciles. Thus, regular monthly earnings increased by 9.5% in the lowest decile but by 5.1% in the highest. This can partly be explained by the emphasis of collective agreements on flat rate increases and specific tariff increases. Therefore, earnings increased proportionally more for lowest earnings and vice versa. The past year was unusual in many ways due to the covid-19 pandemic, which had substantial effects on the composition of the work force. Some employees became part-time workers due to the economic response package, which affected average earnings of certain occupations, relative to working hours. Furthermore, the decrease in the labour force was mainly in lower earning occupations, which also affected average earnings. Meanwhile, there had also been a shift in the weights of economic activities within the labour market as a whole, particularly in Accommodation and food services (I) and public administration.
Comment: The y-axis show the probability of having the wage reflected on the x-axis.The line represent the median. Regular earnings are the remuneration for regular working hours, i.e. ordinary working hours according to collective agreements. Regular earnings for part-time employees are full-time equivalent.
The shortening of the work week affects working hours but not monthly earnings
Hours paid to full-time employees decreased by 1.4% on average between 2019 and 2020. The decrease can be attributed to the shortening of the work week, as well as fewer overtime hours during 2020 than in 2019, presumably due to the covid-19 pandemic. The shortening of the work week does not affect the calculation of the monthly wages, only hours paid.
Hours paid decreased more in the private sector than in public administration, as hours paid decreased by 2.7% for full-time employees in the private sector between the years, and by 0.5% in public administration. It is worth mentioning that the shortening of the work week generally came into force for the private sector in 2020 but in 2021 for the public administration.
About the statistics
Statistics Iceland‘s publication is a time series from 2014 to 2020, with information on earnings of professions for the entire labour market, by economic activity and sectors. Previous statistical publications for the year 2019 have been revised and the statistics are preliminary.
Results are based on the Icelandic Survey on Wages, Earnings and Labour Costs and cover about 91 thousand employees. The survey is a stratified sample survey including legal units with 10 or more employees and data are weighted according to the survey design. The survey covers the majority of the Icelandic labour market even though certain economic activities are missing. In the economic activity of Information and communication, information about smaller companies and IT companies are missing. In addition, data in Public administration, Education and Human health and social work activities are only based on employees within the public sector. Further information on definitions and methods is available on Statistics Iceland‘s website. During the year 2019, new collective agreements were signed in the private sector which stipulated, amongst other things, a flat rate wage increase and shorter working hours, which came into action in the beginning of 2020. Working hours changed from 171.2 to 167.9 for most members of LÍV and VR, while working hours changed from 162.5 to 159.3 for office workers in LÍV and VR, as well as members of SSF from 1 January 2020.
For members in many craft worker unions, coffee breaks were abolished (2 hours and 55 minutes per week) from 1 April 2020 and hours paid henceforth decreased from 173.3 to 160. No further changes were made to working time stipulations in the collective agreements and employees still have the right to take short coffee breaks. There is, however, a new possibilty to concentrate working hours and shorten the working day by eliminating coffee breaks in order to reduce working hours by 13 more minutes per day – or 65 minutes total per week. Hours paid would then decrease even further, to 156 hours per month for full-time employees.