Another drop in unemployment
Vinnumálastofnun (Directorate of Labour) figures show the 5.5 percent unemployment rate had driopped in August from 6.1 percent in July, to a total of some 11,500 people in August. The official unemployment rate peaked in January this year at 11.6 percent and had dropped by 6.1 percent since.
Vinnumálastofnun forecasts the trend will continue and that unemployment will register 5.1 to 5.4 percent—or just a little higher than it was at the start of 2020, before the pandemic. The forecast is dependent on how many people will keep their jobs once staff hiring grants expire. The Hefjum störf employment campaign has helped 4,500 people into work since April, which Landsbankinn analysts believe was one of the biggest drivers of increased employment.
“Now in September, these hiring grants start to expire and it will be significant whether people on hiring grants keep their posts or whether they come to an end. Generally, there has been good experience of hiring grants over the years, but conditions now are very different than they have been. It is of course important for continuing development of the employment situation for people on hiring grants to keep their jobs,” the Landsbankinn report states.
The general unemployment rate dropped in all regions except the Westfjords between July and August. The biggest drop was in Suðurnes (1.2 percent), and the second-biggest in the capital region (0.6 percent). Despite this, the rate of unemployment is still highest in the Suðurnes region, at 9.7 percent—but the rate is no longer double that in the capital, as it was for an extended period.
“Despite setbacks in the fight against the pandemic, it still appears unemployment will reduce in the near future. The situation here within the country has not yet had a major negative impact in the arrival of foreign tourists to the country, though more arrivals had been expected. As before, the fight against the pandemic in our nearest trading partner countries is very important, and the same can be said of the outcome of hirings with grants,” the report says.
Further relaxation of covid rules is expected to be announced today.