Chapter 19, 15 March 2011 Employment policy

1. Chapter 19, 15 March 2011 Employment policy

2. The Administration The Ministry of Welfare is responsible for welfare and family issues, social security, health care and health insurance, housing, equality and the labour market. This includes policy making, preparing legislation and issuing regulations, general supervision of administrative bodies and implementation of the legislation in these fields. The Department of Social and Labour Market Affairs, which is responsible for labour market issues, has a staff of eleven, of which there are seven lawyers and two economists.

3. The Administration On behalf of the Ministry of Welfare, the Directorate of Labour is responsible for implementing the labour market policy, i.a. the management of the public employment service and the active labour market measures, issuing work permits to foreigners who are nationals of countries outside the European Economic Area, implementing some Acts applying to the labour market, taking care of the daily management of the Unemployment Benefit Fund, the Wage Guarantee Fund and the Maternity/Paternity Leave Fund. Total number of staff is 164

4. Employment policy – policy direction • The Prime Minister’ Office has appointed a committee with representatives from the Ministries, the Directorate of Labour and the Social Partners, which is supposed to prepare a national strategy for employment. • The Minister of Welfare nominated two members, one of them is the chairperson. The committee is supposed to submit a report to the Prime Minister and the Minister of Welfare in May 2011.

5. Employment policy – policy direction • Particular consideration is given to those groups that risk long-term unemployment in the wake of the financial crisis. • There will be emphasis on the situation of young people without jobs and with little or no education, especially on ways how to encourage them to enter the school system and also how the school system should give this group special attention. • There has to be a focus on effective labour exchanges and active labour market measures, for. ex. innovative programmes and vocational training and trial engagements. Effective vocational rehabilitation programmes are also one of the key objectives.

6. Employment policy – policy direction • A collaborative forum has been set up to make headway on specific tasks covered by Iceland 2020 and the economic activity plan for Iceland, not least in the areas of employment development and labour market issues. • The government has urged for a target economic growth of 3-5% for 2011, as well as the creation of at least 3-5,000 new jobs. • The Directorate of Labour has placed considerable emphasis on vocational training and trial engagements where an agreement is made with a company or institution on the engagement of a job-seeker in vocational training or in employment on a trial basis.

7. Employment policy – policy direction • A dynamic and diversified economy characterised by responsible growth is the cornerstone on which Iceland 2020 is founded. • To reduce the unemployment rate (> 12 months) to under 3% by 2020. There is also an objective to reduce the percentage of people living in Iceland aged between 20-66, who have not received any formal secondary education, from 30% to 10% by 2020. • Strong emphasis on vocational rehabilitation where one of the aims of the 2020 strategy is to reduce the percentage of people receiving disability pensions from 6.9% of the population to 5.7% by 2020.

8. Employment policy – policy direction • The main growth sectors are likely to be linked to industry and primary production and services, including the high-tech and knowledge industry, innovative sectors and tourism. • The main challenges are how to create new and diversified jobs. • In order to strengthen the economic activity plan, a progressive education policy needs to be in place. A special focus will be placed on further study opportunities and vocational training for people who are temporarily excluded from the labour market.

9. Employment policy – policy direction • According to the Act No. 55/2006 on Labour Market Measures, the Directorate of Labour shall at regular intervals gather information on the employment situation, unemployment and employment prospects relating to individual parts of the country. • The Directorate of Labour shall also make regular surveys on labour demand and the outlook in occupational sectors. • It is also the Directorate´s obligation to follow the results from different labour market measures and it has occasionally entrusted the University of Iceland to make such an assessment.

10. Employment policy – policy direction • In the Parliamentary Resolution from May 2008, on an action plan on migrant issues, there is a special chapter on employment and participation in the labour market. • The Directorate of Labour gives particular attention to measures to support young people of foreign origin on the labour market. • In 2007, an illustrated pamphlet was published on safety issues on construction sites in four languages. • Emphasis was placed on the principle that the rules regarding the application of the collective agreements should be observed and that it should be regarded as a joint responsibility of the parties to ensure that companies pay wages and observe terms of service in accordance with the collective agreements in force and the laws of Iceland.

11. Employment policy – Institutional set-up • Reorganisation of the Ministry for Social affairs and social security and Ministry for Health has the following aims: • to promote high-quality administration • new priorities and merging tasks in order to achieve maximum synergies as well as better use of human resources • simplification of the system and integration of services • The next step is the reorganisation of the institutions working under the auspices of the Ministries in order to find some challenges to increase efficiency, improve service and decrease cost.

12. Employment policy – Institutional set-up • The Directorate of Labour is responsible for public labour exchange, managing unemployment benefits and implementing active labour market measures. • The total number of Directorate of Labour’s staff is 164. • The Directorate of Labour’s budget for 2011 is 919.5 million ISK and the budget for the Unemployment fund is 25.139 million ISK.

13. Employment policy – Institutional set-up • The unemployment rates in Iceland in January 2011 was: • the average of 8.6% • unemployment rate among women was 7.8% • unemployment rate among men was 9.3% • unemployment among the young was about 19.8% of all unemployment. • On average, 2.375 foreign nationals were unemployed in Iceland throughout January 2011.

14. Employment policy - ALMP • Work ability, qualifications and needs of job seekers is estimated through Career Guidance by Personal Advisers and counsellors at the Directorate of Labour and a job-search plan is based on that. • The job seeker is responsible for active participation in his/her job search and labour market measures, in cooperation and under supervision of the Personal Adviser with whom he/she has regular contact and interviews.

15. Employment policy - ALMP • After the collapse of the Icelandic economy in the end of September 2008 the unemployment rate greatly increased. • Ministry of Welfare and the Ministry of Education and Culture recognized the need to take action and established a group of experts to gather together statistics about young jobseekers that reflected the situation. • Focus-group analysis among long-term unemployed 18-24 years old in October 2009. • A report published in November 2009 with the results of and suggestions of measures to tackle the youth unemployment. • Law and budget reforms done in December 2009 to secure the finance of the project. • Project started on 4th of January 2010.

16. Employment policy - ALMP • On the basis of this work the Ministry of Welfare put forward these aims: • that no one should be unemployed longer than three months without being offered a work or opportunity to be active. • that aim should be reached with all people younger than 25 before the first of April 2010 and the first of September 2010 for others.

17. Employment policy - ALMP • The Directorate of Labour reached these goals in close cooperation with social partners and municipalities as well as educational providers. • The goal is to activate jobseekers by offering intensive guidance and counselling and motivate them to seek further education or participate in other learning activities. • The projects will be evaluated by the Social Science Research Institute of the University of Iceland.

18. Employment policy - ALMP • The measures available: • Intensive guidance and counselling to motivate and monitor the progress and offer individuals better follow up. • Educational measures on the forefront. • New tailor-made courses have been developed in cooperation with many educational providers. • Cooperation with adult education centre s – LLL centres and with selected collages. • Job-training and volunteer work.

19. Employment policy - ALMP • It is predicted that the unemployment rate will decrease in the year 2011, compared with 2009 and 2010, but nevertheless the unemployment rate will still be 7-8% in 2011, with over 10.000 unemployed on average in every month. • At least half of them will be long term unemployed. About half of them are without qualifications from upper secondary school, and that is the case for about one third of the workforce. • More emphasis will be laid on continual programmes and courses since most of those who have been unemployed for some months have already participated in some activity. The emphasis will also be more on job training and initiatives, since such activities seem to be the most effective measures leading to permanent work.

20. Employment policy - ALMP • The project/programmes Ungt fólk til athafna (Youth to Action) for 16 – 30 years old and ÞOR (Knowledge and experience) for 30 years and older are now on going projects with the aim to to tackle long-term unemployment. • The goal is to activate jobseekers by offering intensive guidance and counselling and motivate them to seek further education or participate in other learning activities to prevent loss of motivation, skills and employability. It is not an option to refuse such offer.

21. Employment policy - ALMP • There will be taken further steps in web-based advice or consulting by developing new tools and databases. • There is a project starting which aims at creating recognition system of non-formal and informal learning on upper secondary level in given the fact of how big the proportion of the workforce is without much education. • In that light there will also be carried out researches where skills needs and mismatches on labour market will be analysed and described.

22. Employment policy - ALMP • Nine Lifelong Learning Centres are in various parts of the country. • Their role includes supporting and stimulating the local economy by increasing collaboration between the business sector and the schools, with the emphasis on effective adult education in the locality. • At the same time, they encourage people to pursue education more as more alternatives become available.

23. Employment policy - ALMP • All the Lifelong Learning Centres offer continuing vocational education that serves individuals and the enterprises, e.g. courses that are tailor-made according to the need of each enterprise. • Provide educational and vocational counselling. • The social partners have attached great priority to continuing education for people on the labour market.

24. Employment Policy – Undeclared work • Undeclared work is variously referred to as underground or hidden labour, or “black” labour, which is not declared to the tax authorities so it is hard to detect. • Tax fraud is estimated to be 8.5% - 11.5% of Iceland’s total tax revenues. Thereof 5-8% is linked to undeclared work. This results close to 40 billion ISK lost tax revenues every year. • The key problematic sectors seems to be construction, restaurants and tourism, retail and any personal services.

25. Employment Policy – Undeclared work • There are quite a few agencies fighting undeclared work. Following are examples of current key activities. This list is by no means exhaustive: • Cooperation on workplace ID cards and workplace monitoring • The Directorate of Labour and the Internal Revenue Directorate • The Internal Revenue Directorate, the Directorate of Tax Investigations, the Directorate of Labour and the Icelandic Confederation of Labour all have venues for accepting tip-offs whether anonymous or not. Household deduction • Household tax deduction is one way to reduce grey economy. This makes it more advantageous to require a receipt for the work done than to have it done as grey work.