Iceland has always been country with low unemployment rate and since 1980 the highest unemployment rate was about 5% in 1995. But that is now changing rapidly because of the collapse of Iceland’s financial system and it’s currency, the Icelandic krona (ISK).
Since the collapse the unemployment rate has gone up from 1% to over 7% (13.200 persons) in these 4 months since the collapse took place. It’s even expected that it will keep on going up to at least 10% in this year and even more.
Even though many thousands of the foreign workforce has fled the country these numbers are rising so rapidly.
Many Icelanders are thinking about doing the same and try to find work abroad but as the situation grows darker also in the western world some decide to wait for some months to see what will happen abroad. However, the work ads from companies abroad are on the rise in local newspapers so many will without doubt go abroad to work.
It should worry the government that so many people will go abroad to work because as the history tells us, 30-50% of those people won’t come back when the situation in Iceland will be better. This will also lead to problems for Iceland to be able to pay of its debts because fewer will be around to share the load.
The former government did create a plan where companies can change the status of employee from full-time to part-time but the government will pay so that that employee will get paid like he’s working full-time. It has also ease up on the rules that owners of sole proprietorship companies should halt the company if they wanted to have right for unemployment benefits, today they can keep their company running and get estimation of how much unemployment benefits they are entitled to.
One problem that Iceland is going to face this year is that the unemployment fund will be dried up later this year so something has to be done to increase its fund due to this serious crises which the people of Iceland are facing in the coming years.
Hopefully the new government will have better ideas than the former government, otherwise it will have hard time to hold the peace in Iceland.