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Half of older Icelanders are still working

Half of older Icelanders are still working

| Text: Guðrún Helga Sigurðardóttir

Older Icelanders enjoy working and do so for longer than other older people in the Nordic region, the Baltics and the UK. Being active in the labour market is highly valued among the Icelandic.

More than half of people between 60 and 65 in Iceland are still in work. Only one in four Estonians and Lithuanians in the same age group work, and among older Norwegians the number is even lower. 

The Icelanders’ activity has fallen considerably among 70 to 74 year olds. Yet Icelanders still work more than both their Nordic neighbours, people in the Baltics and Brits. Just under one in five Icelanders keep on working past 70. This trend is reflected in the other countries too, and Finland, Norway, Sweden and Lithuania have the lowest numbers of working 70 year olds.

In Iceland most people can retire at 67. Public sector workers can retire at 65 but are allowed to work until they are 70. Women usually retire earlier than men because of health issues. The average early retirement age for women is just above 65 while the average retirement age for men is 70. 

All Icelanders pay part of their salary into private pension funds. At 65 people can begin to draw money from their retirement fund. Professor Stefán Ólafsson at the University of Iceland says this might be a reason why women feel they can take early retirement. 

Valuing active older people

In Iceland it is considered important to keep working into old age. There was a huge demand for labour before the banking crash of 2008, and older people had no problem finding jobs. They wanted to improve their living conditions by earning some extra cash.

The managing director at the Confederation of Icelandic Employers, Vilhjálmur Egilsson, says older people’s position in the labour market has not been influenced by the banking crisis and that older people have not lost their jobs at a greater rate than people from other age groups. He says the Confederation encourages employers to hold on to their workers for as long as possible, no matter their age. He thinks older workers are much appreciated and highly valued by Icelandic employers.

In recent years older Icelanders have generally concluded they cannot live off their pension alone. This is one of the reasons older people have continued to work for as long as possible. So far it has paid off. 

But the chairwoman at the Icelandic pensioners’ association, Jóna Valgerður Kristjánsdóttir, points out that the labour market has changed in recent years. The older population has been well received in the labour market and as a result they have stayed in work for longer. Yet she predicts a change in attitudes and that more people of pensionable age no longer will want to work. Not least because it no longer pays as much as it used to. 

One of the reasons, says Kristjánsdóttir, is new rules in Iceland which mean extra income leads to cuts of up to 60 percent in pension payments and state benefits. Retired people who work will therefore receive less than before. Some recent tax increases have also hit pensioners hard.

Impact on earnings

Kristjánsdóttir is also critical of the government. She reckons its aim is for older people to retire earlier in order to create jobs for younger people. 

“People are healthier than they were 20 years ago. I am convinced most of the older people would work for as long as they could manage if their pay did not impact on their pensions and the various state benefits,” says Kristjánsdóttir. She also wonders:

“Why should you work if it affects your income in such a dramatic fashion?”

But professor Stefán Ólafsson at the University of Iceland says surveys show there are many reasons for why employers value older workers’ efforts in the labour market.

“One survey from 2004-2005 shows that employers consider older employees to be both more responsible and conscientious and that their professional experience is a great advantage,” says professor Ólafsson. 

A different tradition for in-service training

Iceland has a different and shorter tradition for in-service training compared to the rest of the Nordic region. Not until 2010 did a new law result in the organisation of a system for in-service training aimed at people in work. Publicly funded in-service training only exists for people with lower education, who represent a third of Iceland’s labour force. 

Iceland now has several centres for in-service training which operate according to the new legislation. Courses are held in accordance with guidelines from the Ministry of Education and offer study advice, employment guidance and evaluation of skills for individual workers. There are no courses specifically aimed at older workers, says Stefán Stefánsson, head of division at Iceland’s Ministry of Education.  

“Older people have visited us at the ministry to request specially targeted in-service training, but this has yet to happen,” says Stefánsson.

Despite this, there is a lot of focus on in-service training in Iceland, according Vilhjálmur Egilsson from the Confederation of Icelandic Employers.

“We have understood the importance of in-service training now,” he says.

Yet there has not been as much interest for courses and seminars among older workers compared to the younger ones, notes Professor Stefán Ólafsson at the University of Iceland. 

“For some reason older people participate less in in-service training than younger ones,” he says.




Active older people
  • There are just over 33,800 older people (67+) in Iceland. Just over half of those between 65 and 70 are in work. 
  • 18 percent of 55 to 74 year olds who work also attend in-service training every year, while 25 percent of 25 to 64 year olds do the same, according to Eurostat. 
  • Publicly funded in-service training offers various courses, seminars and conferences. The training is only for people with lower education.
  • Older people are allowed to study at Iceland’s universities. 475 people between 65 and 74 are currently enrolled at the University of Iceland, making up 3 percent of the university’s total student population.
  • Until the age of 70, people pay eight percent of their salaries into a pension fund managed by representatives from employers and trade unions. Those who manage to pay two percent into a private pension fund will have that matched by their employer. People can start drawing on their pension money when they turn 60. 
  • State pensions can be drawn from the age of 67, except in cases of early retirement. The minimum state pension is ISK 203,000 (€1,250) a month. 
  • Older people are allowed tax free extra incomes to the tune of ISK 140,000 (€860) a year. Any extra earnings above that will reduce their pension payments. Anyone earning 100 kronor from such work loose 100 kronor off their pension and/or their state benefits. This was not the case before the finance crash. Older people also pay higher taxes.

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