How is unemployment measured in Iceland's labor market?

The Q2 2026 Labour Force Survey measured unemployment at 6.5% for people aged 16 to 74. A July 2026 register-based measure was about 4.0%, but the two figures use different methods and are not directly comparable.

What sets minimum pay and employment terms in Iceland's labor market?

Employment law and the applicable kjarasamningur, or collective wage agreement, set minimum terms. An individual contract may give better terms, but it may not lawfully provide less than the applicable minimum.

Where can jobseekers find vacancies and support in Iceland's labor market?

Vinnumálastofnun provides a vacancy register, My Pages, counselling, CV support, courses and service centers nationwide. EURES also connects Iceland with labor markets in the European Economic Area.

What work authorization does a non-EEA/EFTA national need for Iceland's labor market?

A non-EEA/EFTA national generally needs a work permit and may not start the job before the permit is granted. The permit is normally tied to the named employer and job, so changing employer requires a new permit.

How are foreign qualifications recognized for work in Iceland's labor market?

Regulated professions require recognition and the relevant license from the competent authority. ENIC/NARIC evaluates foreign higher-education qualifications, while foreign skilled trades can receive an assessment followed by nationwide confirmation from the District Commissioner of East Iceland.

Labor market in Iceland

Iceland's labor market combines private and public employment, with collective wage agreements called kjarasamningar setting minimum employment terms across much of the economy. In Q2 2026, the Labour Force Survey recorded 222,300 employed people, an employment rate of 75.8% and unemployment of 6.5%; these preliminary figures differ from register-based measures. Services, tourism, fisheries and aquaculture, manufacturing, construction, ICT, finance, health and education all contribute, while access often depends on qualifications, work authorization and region.

Tip

Match the job, region, qualification status and work authorization before investing time in applications. Treat salary averages and sector growth as comparison signals, not promises, and verify the applicable kjarasamningur and written employment terms before accepting an offer.

byKatrin&Aron

The Icelandic term vinnumarkaður covers the supply and demand for work, the sectors that employ people, pay patterns, qualifications, regional differences and the systems that connect employers with jobseekers. Iceland has a general sector, almenni vinnumarkaðurinn, and a public sector, opinberi vinnumarkaðurinn. Employment law and applicable kjarasamningar set minimum terms; an individual contract may provide better terms, but terms below the applicable agreement are not valid. Trade unions, employer organizations, the State Mediator and public bargaining bodies help shape wages and resolve collective disputes. Statistics Iceland's Q2 2026 Labour Force Survey for ages 16 to 74 recorded a labor force of 237,700, 222,300 employed people, an activity rate of 81.1%, employment of 75.8% and unemployment of 6.5%. Women accounted for 102,700 employed people with an employment rate of 72.4%, while men accounted for 119,600 with an employment rate of 79%. Actual working time averaged 35.6 hours per week; 78% of employed people worked full-time, 21.9% part-time and 4.2% were underemployed. Unemployment was 17.3% among people aged 16 to 24, 4.9% among those aged 25 to 54 and 2.2% among those aged 55 to 74. The figures are preliminary and may be revised. A July 2026 register measure counted about 238,800 employed people from provisional PAYE data, but it is not directly comparable with the survey and produced a different registered unemployment rate of about 4.0%. Demand changes by sector and over time. Iceland's main employment areas include services and public services, tourism, fisheries and aquaculture, fish processing, manufacturing and metals, construction, ICT and data centers, finance, health and social work, education and agriculture. Turnover increased in 2025 by about 10% in technology, 4% in construction, 2% in fishing, aquaculture and fish processing, and 1% in tourism. In May and June 2026, technology turnover rose by 8%, fishing, aquaculture and fish processing by 25%, construction by 4% and tourism fell by 3%; data processing and hosting rose by 122%. These figures indicate sector momentum, not the number of jobs or a formal shortage ranking. The Q2 2026 Job Vacancy Survey recorded 3,540 vacancies, about 247,560 occupied jobs and a vacancy rate of 1.4%. Vacancies increased by 500 and 0.1 percentage points from the previous quarter but were 1,870 lower and 0.8 percentage points lower than a year earlier. The survey covers legal entities with at least one employee and its results are preliminary. A vacancy does not guarantee employment because the employer still assesses qualifications, language skills, experience and authorization to work. Education and training influence access to changing parts of the labor market. Among employed people aged 25 to 64 in 2025, 49.0% had tertiary education, 33.6% had vocational or upper-secondary education and 17.2% had basic education. Since 2005, the tertiary-educated share increased by 18.5 percentage points and the basic-education share fell by 13.2 points. Statistics Iceland's experimental 2025-2040 skills forecast models possible supply and demand by education category and industry; it is a scenario tool, not an official list of occupations with guaranteed shortages. Pay depends on occupation, working time, sector, experience and the applicable collective agreement. In 2025, average regular monthly earnings were ISK 816,000. Average regular earnings for full-time employees were ISK 913,000 and the full-time median was ISK 826,000. Average full-time total earnings, which include additional payments, were ISK 1,058,000; the corresponding occupational-group figures were ISK 766,000 for elementary occupations and ISK 1,634,000 for managers. The full-time median total earnings exceeded ISK 1,007,000 for men and ISK 902,000 for women. These preliminary survey figures cover fewer than 100,000 employees in legal units with at least 10 employees and should not be treated as a guaranteed salary. In 2025, average hourly labor cost was ISK 8,653, including a non-wage share of 20.8%; finance and insurance reached ISK 12,004 per hour, while accommodation and food services averaged ISK 6,426. Regional conditions differ. In 2025, unemployment was 4.9% in the Capital Region and 3.2% in other regions, while actual weekly hours averaged 34.5 in the Capital Region and 38.4 elsewhere. Internal migration increased the population in the South by 648, the Westfjords by 65 and the Northeast by 62, while the Southwest fell by 414 and the Capital Region by 313. Net external migration increased the Capital Region by 1,888 and the South by 487. Employment opportunities, commuting needs and sector concentration can therefore differ substantially between the capital area and other regions. Vinnumálastofnun, the Directorate of Labour, provides a vacancy register, the My Pages service, counselling, CV support, courses and service centers nationwide. Jobseekers receiving relevant support generally confirm their job search between the 20th and 25th of each month. Approved unemployment-benefit recipients can access approved courses free of charge, and foreign jobseekers are entitled to two Icelandic-language courses per year. EURES connects Iceland with labor markets in the European Economic Area and supports cross-border matching. Work authorization depends on nationality and residence status. Nationals of the European Economic Area, the European Free Trade Association and the Faroe Islands generally do not need a temporary work permit. Most non-EEA/EFTA nationals need a permit and may not start the job before it has been granted. A permit is normally tied to the named employer and job, the employer carries the application responsibility, and changing employer requires a new permit. Shortage-based permits are exceptional, generally last up to one year and can be renewed for up to two years; expert permits generally last one year and can extend to four years. From 8 July 2026, permit processing moved from Vinnumálastofnun to the Directorate of Immigration. A student residence permit can allow work without a separate work permit for up to 60% of full-time work during study. Graduates of an Icelandic university may receive a post-study job-search residence permit for up to 18 months, and Icelandic PhD graduates may receive one for up to 12 months. Regulated professions require recognition of qualifications and the relevant professional license. ENIC/NARIC evaluates foreign higher-education qualifications free of charge, usually within several weeks; its result is advisory and cannot be appealed. Foreign skilled trades can undergo ENIC/NARIC assessment followed by nationwide confirmation from the District Commissioner of East Iceland. Professional and health licenses are handled by the competent authority. For non-regulated work, access usually depends on the employer's requirements and the specific job. An employment agreement must normally be provided within two months and should state the parties, workplace, duties, start date, duration, holiday entitlement, notice period, wages, working time, pension arrangements and applicable kjarasamningur. Employers issue pay slips with wage payments; employees contribute at least 4% to a pension fund, and taxes and applicable fees are withheld.