The hourly labour cost in Iceland was estimated to be 6,944 ISK in 2022, highest at 9,655 ISK in Financial and insurance activities and lowest at 5,167 ISK in Accomodation and food service activities.
Share of non-wage cost close to 21%
Labour cost refers not only to paid wages but also the non-wage cost of employment, e.g. employers social contributions as well as employment related taxes.
The share of non-wage cost of total labour cost was 20.7% in 2022. The share has been fairly stable since 2010 but it was slightly lower in 2008 (18%). Since 2018 the share has been almost stagnant, ranged between 20.3% and 20.7%.
The share within individual economic activities has also changed little between years. However, a comparison of different economic activites shows a difference. The share of non-wage cost was estimated lowest at 18.9% in Real estate activites and 19% Constuction. It was estimated highest at 22.4% in the activity of Human health and social work and 22.2% in Education activities.
Parallel to the publishing of information on labour cost in 2022 Statistics Iceland has published more accurate information on the composition of labour cost in 2020, that are based on the results of Eurostat‘s quadrennial Labour Cost Survey. A further breakdown of the share of non-wage cost can be seen in the results of the survey. For example, the figures from 2020 show that the share of employers‘ cost related to sick leaves was 3.9% in the activity of Human health and social services but only 2% in Construction, but payments related to sick leave are counted as non-wage cost.
The highest labour cost in Europe in Norway
Hourly labour cost in the countries of the EU was 30.5 euros and 34.3 euros in the Eurozone. Of the countries covered by Eurostat‘s data the highest labour cost was in Norway (55.6 euros), in Luxembourg (50.7) and Iceland (48.4). The lowest hourly labour cost was in Bulgaria (8.2 euros) and in Romania (9.5). Further figures on labour cost in Iceland and other European countries can be found in Eurostat‘s news release from 30 March 2023.
When making a cross-country comparison of the labour cost it should be noted that currency valuation and price levels can affect the level of labour cost in euros. In the Labour Cost Survey, figures on labour cost adjusted for price levels can be found. According to those figures, labour cost in 2020 was highest in Norway, Germany and Luxembourg but lowest in Serbia, Turkey and Bosnia and Herzegovina. In 2020, labour cost in Iceland adjusted to price levels was the 13th highest of the countries covered by the survey.
About labour cost
Hourly labour cost is based on the Labour Cost Survey (LCS) which is published every four years and is intended to be a timely indicatior of labour cost in the years the survey is not published. Figures on labour cost and its composition in Iceland are comparable to figures on labour cost in other European countries. Information on labour cost in European countries can be found on Eurostat‘s website.
Labour cost refers to the sum of all paid wages and cost paid by employers related to employment of staff. Hours worked are produced with an ensemble of statistical estimation methods based on Statistics Iceland‘s data, most notably the Icelandic Survey on Wages, Earnings and Labour Cost and pay-as-you-go tax collection according to register data. Note that in some instances, for example among managers and professionals, fixed-wage contracts can be common. Thus, employees do not get paid overtime, and therefore their working hours might be underestimated. In other cases hours can be overestimated, e.g. when overtime hours are used instead of overpayments and the recorded hours are not worked.
The results are preliminary.