Based on unadjusted measures from the Icelandic Labour Force Survey, the number of 16-74 year olds active on the labour market was estimated to be 199,300 (±5,600) in October 2020, which is equivalent to an activity rate of 78.3% (±2.2). Of active individuals, the number of employed persons was estimated to be 185,700 (±4,800) and 13,600 (±2,800) unemployed and looking for a job. The rate of employed individuals of the population was estimated to be 73.0% (±2.6) and the unemployment rate 6.8% (±1.4). It is estimated that 55,200 (±5,300) individuals were inactive in October 2020 or 21.7% of the population.
Comparison with measures from October 2019 shows that the activity rate has decreased by 3.1 percentage points between years and the unemployment rate increased by 3.5 percentage points. The inactive rate has increased by 3.2 percentage points and the employment rate decreased by 5.7 percentage points.
The seasonally adjusted numbers in October 2020 show the number of unemployed to be 13,600 which is equivalent to 6.7% of the labour force. The seasonally adjusted activity rate was 79.0% and the employment rate 75.0%. Compared with September 2020 the seasonally adjusted activity rate decreased by 1.1 percentage points and seasonally adjusted unemployment rate increased by 1.8 percentage points. Over the last 6 months the trend of the seasonally adjusted employment rate has decreased by 1.2 percentage points and the seasonally adjusted trend of the unemployment rate increased by 0.6 percentage points.
The Labour Force Survey during the Covid-19 pandemic
Since the effects of the pandemic started to show, the labour market has changed considerably with an uncertainty that has inevitably had effects on the Icelandic Labour Force Survey measures. In these changed circumstances considerable differences can be seen between the unemployment rate published by the Directorate of Labour and the Labour Force Survey mainly due to different definitions of unemployment. Furthermore, the changes in the labour market have shown that it isn’t sufficient to look only to the unemployment rate in the Labour Force Survey’s results to get a clear view on the extent of the effects of Covid-19 on the labour market.
According to the Labour Force Survey, an individual is unemployed if he 1) has not worked for payment for one hour or more in the reference week nor has been away from work temporarily, 2) is actively searching for a job and 3) can start working within two weeks. Currently, however, it is clear that some individuals without a job or individuals who are uncertain whether they will keep their job will possibly not start looking for a job immediately, when workplaces have shut down and economic activities like tourism have declined. Additionally, individuals might be hesitant to assume they can start to work within a short time if there is any kind of uncertainty regarding the employment contract with a former employer.
To inform users about the labour market status in addition to Statistic Iceland’s regular dissemination with emphasis on unemployment and employment rates, Statistics Iceland will also publish statistics of unmet need for employment reflecting both those on the labour market and those who fall outside the labour market.
Unmet need for employment
Labour market slack reflects an unmet need for employment reflecting, both those on the labour market and those who fall outside the labour market. The concept therefore includes larger group than only those who are classified as unemployed according to the Labour Force survey. To estimate unmet need for employment, the following groups are summarised and divided by both the labour force and possible labour force (extended labour force): 1) unemployed; 2) individuals working part time jobs who want and can work more; 3) individuals ready to work but are not looking; 4) individuals not ready to work within two weeks but are looking for a job. The latter two groups are classified as outside the labour force.
In October, the seasonally adjusted number of those who belong to this group was 33,100 individuals or 15.7% of the extended labour force. The seasonality in the numbers is apparent and the labour market slack is usually lowest in July each year. Looking at the trend, the labour market slack took a big jump upwards in the end of 2008 following the economic crisis. The trend was pretty stable until 2014 where we see the trend changing direction downwards. The trend has been rising upwards again since the beginning of 2019.
All numbers are weighted by age and gender and rounded to the nearest hundred.
| Table 1. Labour market in October — unadjusted measures | ||||||
| CI | CI | CI | ||||
| 2018 | (±95%) | 2019 | (±95%) | 2020 | (±95%) | |
| Total 16–74 years | ||||||
| Activity rate | 81.1 | 2.3 | 81.4 | 2.2 | 78.3 | 2.2 |
| Employment rate | 78.7 | 2.8 | 78.7 | 2.3 | 73.0 | 2.6 |
| Unemployment rate | 2.9 | 1.1 | 3.3 | 1.2 | 6.8 | 1.4 |
| Hours of work | 39.7 | 1.2 | 40.5 | 1.1 | 39.4 | 1.0 |
| Labour force | 204,800 | 5,800 | 210,700 | 5,900 | 199,300 | 5,600 |
| Employed | 198,800 | 5,600 | 203,800 | 4,800 | 185,700 | 4,800 |
| Unemployed | 5,900 | 2,300 | 6,900 | 2,500 | 13,600 | 2,800 |
| Inactive | 47,800 | 5,700 | 48,000 | 5,500 | 55,200 | 5,300 |
| Est. population | 252,500 | • | 258,900 | • | 254,500 | • |
| Table 2. Labour market last 6 months — seasonal adjustment | ||||||
| May-20 | Jun-20 | Jul-20 | Aug-20 | Sep-20 | Oct-20 | |
| Total 16–74 years | ||||||
| Activity rate | 79.5 | 80.0 | 80.0 | 80.7 | 80.1 | 79.0 |
| Employment rate | 73.5 | 75.2 | 75.6 | 75.7 | 75.5 | 75.0 |
| Unemployment rate | 6.0 | 4.2 | 6.4 | 6.0 | 4.9 | 6.7 |
| Hours of work | 37.1 | 37.4 | 37.8 | 37.7 | 38.0 | 38.1 |
| Labour force | 209,300 | 208,900 | 211,600 | 209,400 | 208,800 | 201,100 |
| Employed | 191,900 | 198,400 | 197,900 | 196,200 | 198,500 | 191,600 |
| Unemployed | 15,100 | 8,700 | 13,000 | 12,400 | 9,900 | 13,600 |
| Inactive | 52,500 | 51,300 | 51,100 | 50,600 | 52,900 | 52,500 |
| Est. population | 263,800 | 260,000 | 261,100 | 260,300 | 261,800 | 257,400 |
| Table 3. Labour market last 6 months — seasonal adjustment trend | ||||||
| May-20 | Jun-20 | Jul-20 | Aug-20 | Sep-20 | Oct-20 | |
| Total 16–74 years | ||||||
| Activity rate | 79.9 | 80.0 | 80.1 | 80.1 | 80.0 | 79.8 |
| Employment rate | 77.2 | 77.4 | 77.2 | 76.9 | 76.4 | 76.0 |
| Unemployment rate | 4.9 | 5.0 | 5.2 | 5.3 | 5.4 | 5.5 |
| Hours of work | 37.4 | 37.5 | 37.6 | 37.7 | 37.7 | 37.8 |
| Labour force | 208,400 | 209,200 | 209,700 | 209,200 | 208,200 | 207,600 |
| Employed | 198,600 | 199,300 | 199,400 | 198,700 | 197,500 | 196,600 |
| Unemployed | 9,800 | 10,100 | 10,300 | 10,500 | 10,600 | 10,700 |
| Inactive | 53,000 | 52,400 | 51,900 | 51,600 | 51,600 | 51,600 |
| Est. population | 261,000 | 261,000 | 260,900 | 260,700 | 260,500 | 260,500 |
About the data
The Labour Force Survey for October 2020 covers 5 weeks, from September 28th through November 1st. The sample consisted of 1,918 individuals, 16-74 years old and domiciled in Iceland. When those who were domiciled abroad or deceased had been excluded the net sample consisted of 1,870 individuals. Usable answers were obtained from 1,266 individuals which corresponds to 67.7% response rate.