During the 20th century, an extensive social insurance
system has emerged in parallel with the Icelandic welfare
society. The insurance policies are broadly similar to those
in the other Nordic countries. There are general old-age
pensions, widow's pension, occupational injury insurance,
unemployment insurance and sickness insurance, as well as
family support etc.
In 1946, an insurance law was established that dealt with
sickness, unemployment, disability, old age and social
assistance issues. Thus, Iceland became the first Nordic
country to establish a unified social insurance system.
In the 00s, social spending in Iceland amounted to just
over 20% of gross domestic product (GDP), which is the
lowest proportion in the Nordic region.
About 3/4 of the total social expenditure is financed by
the public sector. The remaining expenses are mainly
financed by employers and to a lesser extent by
policyholders through deductibles.
The statutory retirement age is 67, but many retirees can
work up to the age of 70. The pension, ie basic pension and
supplementary pension, amount to 60% of the fixed annual
salary, provided that the pensionable working time has been
forty years. In addition, in order to receive supplementary
pension, you must be a member of a pension fund. Sailors
have special pension provisions, and can be granted a
pension at the age of 60.
Parental leave is three months for each parent. In
addition, parents are entitled to a further three months
which they can freely split between themselves. The
compensation depends on the extent to which the parent
acquires work. Home working women receive a certain basic
amount. Most public servants retain their salary during
parental leave through contractual agreements. Payments are
managed through the general insurance system and the
unemployment fund. An income-related child allowance is paid
for children up to the age of 18, and for children up to the
age of seven, a non-income-related allowance is also given.
For a long time Iceland was relatively spared from high
unemployment. The share of unemployed was long below 1%, but
at the end of the 1980s it started to increase and in
1990-2008 it varied between 2 and 5%. As a result of the
international financial crisis in 2008 and the Icelandic
bank collapse in the same year, unemployment rose and rose
to 7-8% in the following years. Although Iceland recovered
relatively quickly in several areas after the crisis, the
high unemployment figures remained in 2012.
Extensive overtime work has previously characterized the
Icelandic labor market, but the average weekly working hours
have fallen during the 00s. In 2011, men worked an average
of 44 hours a week and women 35 hours. The average weekly
working time for both sexes is 40 hours.
Iceland has the largest wage spread of the Nordic
countries. Visit AbbreviationFinder to see the definitions of ISL and acronym for Iceland. The income differences between men and women are
low in international comparison; women have an average of
about 70% of men's salary. In the lowest paid occupations,
women are dominant.
In recent years, several steps have been taken to
equalize unjustified gender differences in the labor market.
In 2014, Iceland introduced gender quotas to corporate
boards with the aim of getting more women into top positions
in the business sector, assignments that have so far been
dominated by men. Iceland became the second in the world to
introduce quotas. First out was Norway.
In order to reduce the pay gap between men and women, in
2018, fines are introduced for companies with over 250
employees who do not pay equal pay to men and women even
though they do an equal job.