The coronavirus pandemic (Covid-19) had a noticeable effect on the Icelandic labour market for most of the year 2020. One of its manifestations was the lowest average yearly employment rate of 16-74 year olds since the beginning of the Icelandic Labour Force Survey in 1991. The employment rate in 2020 was 79.6%, which is the first time the rate is below 80%. The activity rate is the proportion of the sum of employed and unemployed divided by the population.

The proportion of employed people was 75.3% in 2020, the lowest since 2011. The average unemployment was 5.5% in 2020, which is somewhat lower than registered unemployment figures from the Directorate of Labour. One reason for this is that more individuals than before are inactive, i.e. do not have a job, are not looking for work and/or are not ready to start work within a certain time. However, individuals in this situation are still out of work and might define themselves as unemployed. Never before have as many been inactive as in 2020, or about 53,000 persons, which is 20.4% of the population aged 16 to 74 years.

Employment rate in third quarter the lowest since 2011
The number of employed in the fourth quarter of 2020 was 192,500 people and the employment rate of the population 73.8%. From the fourth quarter of 2019 to the same period in 2020, the number of employed persons decreased by 7,200 and its share of the population decreased by 3.2 percentage points. The employment rate has not been as low in the fourth quarter since 2011 when it was also 73.8%.

The employment rate for women was 71.2% and for men 76.2%. The number of employed women decreased by 2,000 and the number of men by 5,100. The proportion of employed people in the Capital area was 74.1% and outside the Capital area 73.2%. In comparison, 199,700 persons were in employment and the employment rate was 77.0% in the fourth quarter of 2019. In that quarter, the employment rate for women was 73.9% and men 79.8%. The employment rate in the Capital area was 77.3% and 76.4% outside the Capital area.

Fewer working hours
In the fourth quarter of 2020, the average number of actual working hours per week was 37.9 hours for those who worked during the reference week, 33.1 hours for women and 41.0 hours for men. Compared with the fourth quarter of 2019 the average number of actual working hours was 39.1 hours, 35.2 hours for women and 42.5 for men. In the year 2020, the average hours of actual work was 37.9, compared with 39.6 hours in 2019. This is the lowest measure of actual working hours since the beginning of the LFS in 1991.

In the fourth quarter of 2020 the average usual working hours of workers were 37.8 hours in a usual week, compared with 38.8 hours in the fourth quarter of 2019. The main reasons for working fewer hours than ususal in the fourth quarter of 2020 were vacation (45.4%), working arrangements (14.3%), variable working hours (12.0%), illness (8.3%) and 13.5% cited other reasons. Covid-19 was named as a reason by 6,5% compared with just 1.4% in the third quarter of 2020.

Unemployment 5.1%
The average number of persons in the labour force was 205,300 in the fourth quarter of 2020 according to the Icelandic Labour Force Survey, or 78.7% of the population aged 16 to 74 years. Of these, 12,800 persons were unemployed, or 6.2%. At the same time, about 2,800 jobs were available in the Icelandic labour market according to Statistics Iceland’s job vacancy survey, or about 1.3% of jobs according to previously published figures. In comparison, 6,800 persons were unemployed in fourth quarter of 2019, which means that unemployment has increased by 2.9 percentage points over the period.

Within the age group 16 to 24 years, the unemployment rate was 9.3% which is the almost the same rate as it was the year before. Over the period, unemployment among 25 to 54 year olds increased by 4.1 percentage points, or from 2.5% to 6.6%. The unemployment rate for 55 to 74 year olds increased by 1.6 percentage points, from 1.9% in the fourth quarter of 2019 to 3.3% in the fourth quarter of 2020.

Inactive persons
In the fourth quarter of 2020, 55,700 persons were inactive or 21.3% of the population aged 16 to 74 years. Of women, 30,500, or 27.2%, were inactive and of men, 24,100 were inactive or 20.5%. Inactive means not being part of the labour market as employed or unemployed.

The majority (18,000) of those inactive in the fourth quarter of 2020 regarded themselves as retired, or 32.3%. Students were 16,300, or 29.2%, 9,600 were disabled or 17.2% and 4,700 individuals were ill or temporarily unable to work or 8.5%. About 2,500 of those who were inactive considered themselves unemployed or 4.5%. However, these individuals are not considered unemployed in the LFS as they do not meet the criteria in the survey's definition of unemployment. However, the main status of inactive individuals is determined by how they define themselves. About 2,300 persons worked at home or were on maternity leave, or 4.2%, and about 2,300 people, or 4.1%, defined their status in some other way.

Working from home reaches a new level
In the fourth quarter of 2020, a total of 46.9% of employees aged 25 to 64 years worked remotely from home in their main job. Thereof, 12.8% were employees who usually worked from home while 34.2% sometimes worked from home. This is an increase from the previous year when 33.3% of employees worked to some extent remotely from home in their main job, 4.1% usually worked from home and 29.2% sometimes. Working remotely from home only applies to the main work of individuals and not to domestic work or other work at home.

Actual working hours for employees 25 to 64 years old in the fourth quarter of 2020 were 39.3 on average per week, 40.4 hours for employees who worked from home and 38.4 hours for those who never work from home. In comparison, employees aged 25 to 64 years worked an average 40.9 actual hours in the fourth quarter of 2019, those who worked at home worked 41.9 hours and those who never work at home 39.4 hours.

In the fourth quarter of 2020, employees worked on average 24.1 hours remotely from home or about 61% of their actual hours. In the fourth quarter of 2019, employees who worked part-time at home worked 6.1 hours on average, or 14.4% of the hours worked.

Annual figures have been published at the same time as figures for the fourth quarter of 2020 and previously published provisional monthly figures for the LFS updated.

Statistics