Historically, migration to Iceland remained very low due to its remote location, rough climate, and a lack of economic opportunities; however, since the country joined the European Economic Area in 1994, immigration has increased significantly. In 2022, nearly 15 percent of the inhabitants in Iceland had another citizenship than Icelandic. With increased migration, integration has received more attention over the last years. For instance, a reform implemented in 2020 moved more responsibility for integration away from the local municipalities on to the central authorities.
A lot of the immigrants who come to Iceland are unskilled labor migrants. Many work in the country's booming tourism industry, or within the manufacturing industry. The participation rate is almost equal between the native Icelandic population and the foreign-born population, and unemployment rates are low. However, foreigners in Iceland generally earn much less than Icelanders. The income of both groups has grown over the last years, but the average foreigner earned around one million Icelandic Krona less than their Icelandic counterparts in 2018.
More immigrants graduate from higher education
A high number of the people immigrating to Iceland are from Poland. This is reflected in the fact that Polish is by far the most spoken foreign language in primary schools in the country. The number of foreign children in pre-primary schools has increased significantly over the last years, which suggests that foreigners are settling in Iceland at a higher rate than before. Furthermore, the number of immigrants graduating from higher education has increased significantly over the past 20 years. This is both due to an increased number of immigrants living in Iceland, and because many migrate to Iceland to study there. However, foreign-born citizens are still over-represented among early leavers in upper secondary schools.
Living conditions: a mixed picture
While it is sometimes claimed that there is less racism and discrimination in Iceland than in other countries with more immigrants, the country has received critique for lagging behind its Nordic neighbors when it comes to integration. The statistics reveal a mixed picture, but citizens born outside of the EU in particular tend to score lower than Icelanders and EU-born citizens. For instance, the material and social deprivation rate among people born outside of the EU is 4.5 percent, whereas it is below three for the other two groups. Moreover, the at-risk-of-poverty rate is higher among people born outside of Iceland than people born in the country. Overcrowding is also a problem more present among foreigners than among Icelanders. On the other hand, a high share of both EU-born and non-EU-born citizens report that they have no unmet needs of medical examination to declare, and the share of them who perceive their health as bad or very bad is relatively low, although it is higher among the latter group.
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Einar H. Dyvik
Research expert covering Nordics and global data for society, economy, and politics