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Level of Living Consequences of the Financial Crisis The Case of Iceland Kolbeinn Stefánsson and Stefán Ólafsson Welfare and Professionalism in Turbulent Times University of Iceland August 11.-13. 2011. Content. Context Macro-developments GDP, unemployment, wages, prices and consumption

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  1. Level of Living Consequences of the Financial CrisisThe Case of IcelandKolbeinn Stefánsson and Stefán ÓlafssonWelfare and Professionalism in Turbulent Times University of IcelandAugust 11.-13. 2011

  2. Content • Context • Macro-developments • GDP, unemployment, wages, prices and consumption • Welfare strategy of protection • Poverty and financial hardships • Emigration • Conclusions

  3. October 6, 2008 God Bless Iceland Icelandic Pension System – Stefán Ólafsson 2008

  4. S O L D O U T Icelandic Pension System – Stefán Ólafsson 2008

  5. Things were looking pretty grim Icelandic Pension System – Stefán Ólafsson 2008

  6. The Utensils Revolution

  7. 1. Macro developments:Deep recession

  8. Accumulated growth/contraction from 2008 through 2010 Source: Eurostat and Statistics Iceland

  9. Affluence levels in the Crisis (2009)GDP per capita as a % of EU (27) average Source: Eurostat and Statistics Iceland

  10. GDP – Quarterly adjusted seasonal changes Source: Statistics Iceland

  11. Unemployment at end of year 2010% of labour force (quarter 4) Source: Eurostat and Statistics Iceland

  12. Quarterly unemployment rate, men and women Statistics Iceland

  13. Employment population rate in 2010Very high – despite the setback Source: Eurostat

  14. Labour market activity rate of men and women, 2003-2010 Source: Statistics Iceland

  15. Average hours worked per week, men and women, first quarter 2003-2011 It is still a long week Less overtime Fewer 2nd jobs More part-time Source: Statistics Iceland

  16. Consumer Price Index 2000-2011. Base year 1988 Source: Statistics Iceland

  17. Private consumption, fixed prices (base year 2000) Source: Statistics Iceland

  18. 2. Welfare strategy:Sheltering the lower income groups

  19. Welfare expenditures as % of GDP Source: Statistics Iceland

  20. Change of Real Earnings by Deciles, 2008-2009 (before and after tax and benefits) % change of real total earnings from 2008 to 2009 Before tax After tax

  21. Growing income inequality from 1995 – Then reversionGini coefficients for disposable income (Couples only; all earnings counted) Disposable earnings-all included Disposable earnings-capital gains excluded Source: Public Tax Authority

  22. 3. Financial hardships

  23. Poverty and financial hardship, 2003-2010

  24. Financial hardship in Iceland 2004-20106 measures of difficulties (EU-SILC Data) Source: Statistics Iceland

  25. Difficult to make ends meet (% of households) EU-SILC Data for 2009 Source: Eurostat

  26. Financial hardship 2004-2010Groups in greatest difficulties (EU-SILC Data) Source: Statistics Iceland

  27. 4. Voting with their feet?

  28. Net migration to/from Iceland 1967-2010Number of immigrants – emigrants: Icelanders and foreigners Iceland might loose 2 – 4% of population Source: Statistics Iceland

  29. Immigration and emigration – absolute numbers, by citizenship Source: Statistics Iceland

  30. Conclusion • Crisis not as deep as expected • Private debt is an increased burden • Living standards set back, by some 5-6 years • Lower income groups sheltered • Welfare strategy of protection works • No mass emigration • Growth resuming now • Cause for guarded optimism

  31. Thank you!

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