Iceland

Learn even more about Iceland at oecd.org

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indicator	value	unit
Population	0.3	mil.
Visitors per year	0.7	mil.
Renewable energy	84.7	%

How’s Life?

Iceland performs well in many dimensions of well-being relative to other countries in the Better Life Index. Iceland outperforms the average in jobs, health, environmental quality, social connections, civic engagement, safety and life satisfaction. It underperforms average in education. These assessments are based on available selected data.

Money, while it cannot buy happiness, is an important means to achieving higher living standards. In Iceland, the average household net-adjusted disposable income per capita is more than the OECD average of USD 30 490 a year.

In terms of employment, about 78% of people aged 15 to 64 in Iceland have a paid job, above the OECD employment average of 66%. Some 80% of men are in paid work, compared with 75% of women. In Iceland, 12% of employees work very long hours in paid work, above the OECD average of 10%, with 18% of men working very long hours in paid work compared with 5% of women.

Good education and skills are important requisites for finding a job. In Iceland, 76% of adults aged 25-64 have completed upper secondary education, lower than the OECD average of 79%. However, completion varies between men and women, as 74% of men have successfully completed high school compared with 78% of women. In terms of the quality of the education system, the average student scored 481 in reading literacy, maths and science in the OECD's Programme for International Student Assessment (PISA). This score is lower than the OECD average of 488. On average in Iceland, girls outperformed boys by 20 points, well above the average OECD gap of 5 points.

In terms of health, life expectancy at birth in Iceland is around 83 years, two years higher than the OECD average of 81 years. Life expectancy for women is 85 years, compared with 82 for men. The level of atmospheric PM2.5 – tiny air pollutant particles small enough to enter and cause damage to the lungs – is 6.4 micrograms per cubic meter, below the OECD average of 14 micrograms per cubic meter. In Iceland, 97% of people say they are satisfied with the quality of their water, much higher than the OECD average of 84%.

Concerning the public sphere, there is a very strong sense of community and high levels of civic participation in Iceland, where 98% of people believe that they know someone they could rely on in time of need, more than the OECD average of 91%. Voter turnout, a measure of citizens' participation in the political process, was 81% during recent elections, higher than the OECD average of 69%. Social and economic status can affect voting rates; voter turnout for the top 20% of the population is an estimated 88% and for the bottom 20% it is an estimated 82%.

When asked to rate their general satisfaction with life on a scale from 0 to 10, Icelanders gave it a 7.6 grade on average, higher than the OECD average of 6.7.

For more information on estimates and years of reference, see FAQ section and BLI database.

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OECD in Action

OECD Economic Surveys: Iceland

OECD’s periodic surveys of the Icelandic economy. Each edition surveys the major challenges faced by the country, evaluates the short-term outlook, and makes specific policy recommendations. Special chapters take a more detailed look at specific challenges. Extensive statistical information is included in charts and graphs.

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Iceland in Detail

Housing – Iceland expand

Key Findings

Living in satisfactory housing conditions is one of the most important aspects of people's lives. Housing is essential to meet basic needs, such as shelter, but it is not just a question of four walls and a roof. Housing should offer a place to sleep and rest where people feel safe and have privacy and personal space; somewhere they can raise a family. All of these elements help make a house a home. And of course there is the question whether people can afford adequate housing.

Housing costs take up a large share of the household budget and represent the largest single expenditure for many individuals and families, by the time you add up elements such as rent, gas, electricity, water, furniture or repairs.

But in addition to housing costs it is also important to examine living conditions, such as the average number of rooms shared per person and whether households have access to basic facilities. The number of rooms in a dwelling, divided by the number of persons living there, indicates whether residents are living in crowded conditions. Overcrowded housing may have a negative impact on physical and mental health, relations with others and children's development. In addition, dense living conditions are often a sign of inadequate water and sewage supply. In Iceland, the average home contains 1.6 rooms per person, slightly less than the OECD average of 1.7 rooms per person. In terms of basic facilities, 100% of dwellings sampled in Iceland contain private access to an indoor flushing toilet, compared with an OECD average of 97%.

Better Policies for Better Lives

Affordable housing for low-income families

A shortfall between housing supply and demand has driven up housing prices in Iceland, particularly affecting affordability among low-income families in private rentals. To rebalance the market by restraining demand and to help vulnerable families, the government introduced a reform limiting the ability of the Housing Financing Fund to authorise new loans in 2016, while shifting policy to directly providing housing to low-income families. For example, the government committed to supplying 400 new housing units in 2016 and creating more transparent housing benefits.

Beginning in 2017, the government also introduced limits on the short-term rental market, in part to protect tenants, although the measure is also expected to help ease some of the pressures that are pushing housing prices up.

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How's Life?: Measuring Well-being

Indicators

Income – Iceland expand

Key Findings

While money may not buy happiness, it is an important means to achieving higher living standards and thus greater well-being. Higher economic wealth may also improve access to quality education, health care and housing.

Household net adjusted disposable income is the amount of money that a household earns each year after taxes and transfers. It represents the money available to a household for spending on goods or services. In Iceland, the average household net adjusted disposable income per capita is higher than the OECD average of USD 30 490.

Household net wealth is the total value of a household's financial and non-financial worth, such as money or shares held in bank accounts, the principal residence, other real estate properties, vehicles, valuables and other non-financial assets (e.g other consumer durables). In Iceland, the average household net wealth is higher than the OECD average of USD 323 960.

For more information on estimates and years of reference, see FAQ section and BLI database.

Better Policies for Better Lives

A highly equal society

Household income has benefited from employment growth and significant wage increases giving it the lowest poverty rate in the OECD. Iceland’s poverty rate among the elderly is also particularly low at 2.8% compared to the OECD average of 14.7%.

Strong trade unions and wage bargaining have helped promote income equality, which has kept poverty rates down and maintained inclusiveness, even in times of crisis. For example, co-operation with social partners, helped bring down inflation in the 1990s and minimised the impact of the financial crisis in 2008-09 by protecting the lowest paid workers. Partnerships with the labour market for welfare payments also support income equality, including, for example: a fully-funded occupational pension system, sickness funds, rehabilitation funds for long-term ill or injured workers, and funds for the continuous education of lower-skilled workers and life-long learning. More efforts, however, need to be made in balancing life and work as many people work very long hours to maintain their quality of life.

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How's Life?: Measuring Well-being

Indicators

Jobs – Iceland expand

Key Findings

Having a job brings many important benefits, including: providing a source of income, improving social inclusion, fulfilling one's own aspirations, building self-esteem and developing skills and competencies. In Iceland, 78% of the working-age population aged 15 to 64 has a paid job. This figure is much higher than the OECD employment average of 66% and one of the highest rates in the OECD.

Unemployed persons are defined as those who are not currently working but are willing to do so and actively searching for work. Long-term unemployment can have a large negative effect on feelings of well-being and self-worth and result in a loss of skills, further reducing employability. In Iceland, the percentage of the labour force that has been unemployed for a year or longer is currently at 0.7, much lower than the OECD the average of 1.8%.

The wages and other monetary benefits that come with employment are an important aspect of job quality. Icelanders earn USD 67 488 per year on average, more than the OECD average of USD 49 165.

Another essential factor of employment quality is job security, in terms of expected loss of earnings when someone becomes unemployed. This includes how likely you are to lose your job, how long you are likely to remain unemployed and how much financial assistance you can expect from government. Workers facing a high risk of job loss are more vulnerable, especially in countries with smaller social safety nets. In Iceland, workers face an expected 1% loss of earnings if they become unemployed, much lower than the OECD average of 5.1% and the lowest in the OECD.

Better Policies for Better Lives

Equal status and equal rights of men and women at work

Iceland consistently ranks among the top performers in terms of the participation of women in the labour market and on the Global Gender Gap Index. Iceland also ranks in the top ten on economic participation and opportunity.

Publicly-owned companies and public limited liability companies with at least 50 employees and boards of more than three members are legally required to be composed of at least 40% of each gender. Smaller companies (with 25 employees or more) must disclose the gender composition of their employees, including those in management positions. Though Iceland has had success in reducing the gender gap, which was about 5.1% in 2011-13, the government is determined to reduce it even more.

One initiative focuses on making sure that all jobs of equal value are paid the same. The government plans to make smaller companies, with 25 or more employees, develop a certification scheme for gender pay equality. Since this type of obligation could put pressure on smaller companies, the government plans to roll out the scheme gradually and monitor the change regularly to allow for modifications as needed. This is a good example of best practice in continuing successful efforts in promoting and supporting gender equality in the workplace.

For more information on estihmates and years of reference, see FAQ section and BLI database.

More Resources

How's Life?: Measuring Well-being OECD Job Quality Database

Indicators

Community – Iceland expand

Key Findings

Humans are social creatures. The frequency of our contact with others and the quality of our personal relationships are thus crucial determinants of our well-being.

A strong social network, or community, can provide emotional support during both good and bad times as well as provide access to jobs, services and other material opportunities. In Iceland, 98% of people believe that they know someone they could rely on in a time of need, the highest rate in the OECD, where the average is 91%.

A weak social network can result in limited economic opportunities, a lack of contact with others, and eventually, feelings of isolation. Socially isolated individuals face difficulties integrating into society as a contributing member and fulfilling personal aspirations.

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How's Life?: Measuring Well-being OECD Insights: Human Capital

Indicators

Education – Iceland expand

Key Findings

A well-educated and well-trained population is essential for a country's social and economic well-being. Education plays a key role in providing individuals with the knowledge, skills and competences needed to participate effectively in society and in the economy. Having a good education greatly improves the likelihood of finding a job and earning enough money. People in Iceland can expect to go through 18.8 years of education between the ages of 5 and 39, similar to the OECD average of 18 years.

Graduating from upper secondary education has become increasingly important in all countries, as the skills needed in the labour market are becoming more knowledge-based. High-school graduation rates therefore provide a good indication of whether a country is preparing its students to meet the minimum requirements of the job market. In Iceland, 76% of adults aged 25-64 have completed upper secondary education, lowerer than the OECD average of 78%.

But graduation rates, while important, speak little to the quality of education received. The OECD's Programme for International Student Assessment (PISA) reviews the extent to which students have acquired some of the knowledge and skills that are essential for full participation in modern societies. In 2018, PISA focused on examining students' reading ability, skills in maths and level in sciences, as research shows that these skills are more reliable predictors of economic and social well-being than the number of years spent in school.

The average student in Iceland scored 481 in reading literacy, maths and sciences, below the OECD average of 488. The best-performing school systems manage to provide high-quality education to all students.

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How's Life?: Measuring Well-being

Indicators

Environment – Iceland expand

Key Findings

The quality of our local living environment has a direct impact on our health and well-being. Outdoor air pollution is one important environmental issue that directly affects the quality of people's lives. Despite national and international interventions and decreases in major pollutant emissions, the health impacts of urban air pollution continue to worsen, with air pollution set to become the top environmental cause of premature mortality globally by 2050. Air pollution in urban centres, often caused by transport and the use of small-scale burning of wood or coal, is linked to a range of health problems, from minor eye irritation to upper respiratory symptoms in the short-term and chronic respiratory diseases such as asthma, cardiovascular diseases and lung cancer in the long-term. Children and the elderly may be particularly vulnerable.

PM2.5 – tiny particulate matter small enough to be inhaled into the deepest part of the lung – is monitored in OECD countries because it can harm human health and reduce life expectancy. In Iceland, PM2.5 levels are 6.4 micrograms per cubic meter, much lower than the OECD average of 14 micrograms per cubic meter and than the annual guideline limit of 10 micrograms per cubic meter set by the World Health Organization.

Access to clean water is fundamental to human well-being. Despite significant progress in OECD countries in reducing water pollution, improvements in freshwater quality are not always easy to discern. In Iceland, 97% of people say they are satisfied with water quality, one of the highest in the OECD, where the average satisfaction level is 84%.

More Resources

How's Life?: Measuring Well-being OECD Environmental Outlook to 2050

Indicators

Governance – Iceland expand

Key Findings

Trust in government is essential for social cohesion and well-being. High voter turnout is a measure of citizens' participation in the political process. In the most recent elections for which data are available, voter turnout in Iceland was 81% of those registered. This figure is higher than the OECD average of 69%.

Broader public engagement in the decision-making process is also important for holding the government to account and maintaining confidence in public institutions. The formal process for public engagement in developing laws and regulations is one way to measure the extent to which people can become involved in government decisions on key issues that affect their lives. In Iceland, the level of stakeholder engagement in developing regulations is 2.1 (on a scale between 0 and 4); in line with the OECD average.

For more information on estimates and years of reference, see FAQ section and BLI database.

Better Policies for Better Lives

Open government for the environment

Iceland has a long tradition of open and free access to information, including on environment. The pioneering 1993 Public Access to Environmental Information Act established the right of access to environmental information without having to state an interest. The law also required government bodies to provide a written explanation for delaying information provision more than seven days.

These rights were strengthened in 2006 through the Act on the Right of Access to Information on Environmental Matters. The act reinforced access to information on environmental matters held by public authorities.

Wide access to information has been associated with the traditionally open participation of the public in policy and decision making. In terms of civic and political participation, Icelanders are more active than the citizens of any EU country. In all, 61% took part in some such activity over a 12-month period, compared with 25% in the EU27. This includes both direct personal participation – such as contacting a politician or official and attending a meeting or demonstration (37%, more than twice the EU27 average of 16%) – and self-expression via petitions, including online (46%).

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How's Life?: Measuring Well-being Regulatory Policy Outlook: Iceland

Indicators

Health – Iceland expand

Key Findings

Most OECD countries have enjoyed large gains in life expectancy over the past decades, thanks to improvements in living conditions, public health interventions and progress in medical care. Life expectancy at birth in Iceland is just above 83 years, two years above the OECD average of 81 years. Higher life expectancy is generally associated with higher health care spending per person, although many other factors have an impact on life expectancy (such as living standards, lifestyles, education and environmental factors).

When asked, "How is your health in general?" 77% of people in Iceland reported to be in good health, more than the OECD average of 68%. Despite the subjective nature of this question, answers have been found to be a good predictor of people's future health care use. Gender, age and social status may affect answers to this question.

Better Policies for Better Lives

Real-time quality indicators

The emergency department in Landspitali University Hospital uses real-time indicators to track quality, safety and operational efficiency. By continuously gathering and displaying data, hospital staff identify issues as they arise. Some of the indicators examined include: waiting times, numbers of patients, service times, admittance rates, and blood sample hemolytic rates, among others.

Since the introduction of this practice the hospital has experienced lasting improvements. Over 18 months blood sample defects dropped from 12% to 3%. This has reduced patient waiting time in hospital by 90 minutes. The use of real-time indicators has also helped staff better monitor triage, waiting times, and the time it takes to admit a patient.

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How's Life?: Measuring Well-being

Indicators

Life Satisfaction – Iceland expand

Key Findings

Happiness or subjective well-being can be measured in terms of life satisfaction, the presence of positive experiences and feelings, and the absence of negative experiences and feelings. Such measures, while subjective, are a useful complement to objective data to compare the quality of life across countries.

Life satisfaction measures how people evaluate their life as a whole rather than their current feelings. When asked to rate their general satisfaction with life on a scale from 0 to 10, Icelanders on average gave it a 7.6 grade, much higher than the OECD average of 6.7.

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How's Life?: Measuring Well-being

Indicators

Safety – Iceland expand

Key Findings

Personal security is a core element for the well-being of individuals. Do you feel safe out walking, alone at night, for example? In Iceland 85% of people say that they feel safe walking alone at night, more than the OECD average of 74%.

The homicide rate (the number of murders per 100 000 inhabitants) is a more reliable measure of a country's safety level because, unlike other crimes, murders are usually always reported to the police. According to the latest OECD data, Iceland's homicide rate is 0.3, one of the lowest rates in the OECD, where the average is of 2.6.

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How's Life?: Measuring Well-being

Indicators

Work-Life Balance – Iceland expand

Key Findings

Finding a suitable balance between work and life is a challenge for all workers, especially working parents. The ability to successfully combine work, family commitments and personal life is important for the well-being of all members in a household. Governments can help to address the issue by encouraging supportive and flexible working practices, making it easier for parents to strike a better balance between work and home life.

An important aspect of work-life balance is the amount of time a person spends at work. Evidence suggests that long work hours may impair personal health, jeopardise safety and increase stress. In Iceland, the share of employees working very long hours in paid work is about 12%, more than the OECD average of 10%.

The more people work, the less time they have to spend on other activities, such as time with others, leisure activities, eating or sleeping. The amount and quality of leisure time is important for people's overall well-being, and can bring additional physical and mental health benefits. In Iceland, full-time workers devote less of their day on average, to personal care (eating, sleeping, etc.) and leisure (socialising with friends and family, hobbies, games, computer and television use, etc.) than the OECD average of 15 hours.

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How's Life?: Measuring Well-being

Iceland

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How’s Life?

Topics

OECD in Action

OECD Economic Surveys: Iceland

Find Out More

OECD Data Portal – Iceland

The Economic Benefits of Air Quality Improvements in Arctic Council Countries

Education Policy Outlook 2019 - Iceland

Iceland in Detail

Housing – Iceland expand

Key Findings

Better Policies for Better Lives

More Resources

Indicators

Income – Iceland expand

Key Findings

Better Policies for Better Lives

More Resources

Indicators

Jobs – Iceland expand

Key Findings

Better Policies for Better Lives

More Resources

Indicators

Community – Iceland expand

Key Findings

More Resources

Indicators

Education – Iceland expand

Key Findings

More Resources

Indicators

Environment – Iceland expand

Key Findings

More Resources

Indicators

Governance – Iceland expand

Key Findings

Better Policies for Better Lives

More Resources

Indicators

Health – Iceland expand

Key Findings

Better Policies for Better Lives

More Resources

Indicators

Life Satisfaction – Iceland expand

Key Findings

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Indicators

Safety – Iceland expand

Key Findings

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Indicators

Work-Life Balance – Iceland expand

Key Findings

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Indicators