Banking collapse causes Icelanders move to Norway

REYKJAVIK The Nordic Countries have been the preferred destination among Icelandic citizens to get a better future, but the main choice has been Norway due to its better economic conditions. People are not thinking to come back until the situation is better in the country. Although the markets say that Iceland has considerably improved, many people still think that one of the best solutions is to try their luck abroad.

By Carlos Encinas

The history of this prosperous and low unemployment country changed radically four years ago when the banking system collapsed. In a situation of protests against the government and the banks, demonstrations in the streets, deep disillusionment, disaffection and low expectations about the future, many people started to pack their stuff towards the east in the European continent. Due to the excellent conditions in terms of wages, job opportunities and quality of life, many Icelandic people decided to migrate to the northern Scandinavian country of Norway.

The figures and statistics clearly point out that the situation nowadays in Iceland is not good enough to stay and that people try to find new perspectives overseas.

According to Statice Iceland (the main statistic authority in the country), the following number of persons moved from Iceland to Norway in the years and periods that are shown.

  • 2009: 1,576 people.
  • 2010: 1,539 people.
  • 2011 1,599 people.
  • 1998-2008: 5,060 people, a decade before the collapse.
  • 2008-2011: 5,037 people, 4 years after the collapse.

Source: Statice Iceland.

Through history, Norway has been one of the preferred choices for Icelandic people to move abroad. In the last 20 years, 1998 was the one with more Icelandic emigrating to Norway (927 people) and the average from 1988 to 2008 was 470.62 people. The main destinations for Icelandic citizens were still last year the Nordic countries, when 3,022 out of 4,135 migrated to Norway, Denmark or Sweden.

This migration crisis has hit Iceland seriously mostly in 2009 and 2010. These figures went down in 2011 and it is expected that they will also decrease in 2012. The Icelandic Prime Minister, Jóhanna Sigurðardóttir, said last December in an interview in the national television channel RÚV that some people were over exaggerating the migration crisis.

Is it worth going to Norway?

Living in Norway implies higher costs and expenses than in Iceland, and since the Norwegian kroner is stronger, the general products are much more expensive:

  • House price: 70% higher.
  • Water/electricity bill: 80% higher.
  • Drinks/Café. 1 third higher.
  • Wages: 50% higher.

Mr. Baldur Arnarson, a journalist that works in the national desk of the Icelandic newspaper Morgunbladid, thinks that it is worth to move to Norway for people currently without a job in Iceland.

“The main reason to emigrate to Norway has to do with the strong economy that they have. Salaries are higher and they have a welfare state with a very high standard of living and the labour market is strong”, he says.

One example of this is Gauti Jóhannsson, a 30-year old Icelandic fiber optic technician that left Iceland almost four years ago right after the banking collapse.

“I earned about 450,000 Icelandic Kroner (2,700 €) before taxes in my previous job in Iceland before the banking collapse took place. Now in Norway I earn around 32,000 Norwegian Kroner (4,200 €) before taxes. The conditions here are much better in economic terms and I have more money than in Iceland after paying bills,” he explains.

Gauti Jóhannsson did not need many time to decide that a better future was waiting for him abroad. He is now living in Norway, but first he spent two years in Denmark.

“My boss in Iceland got me a job in Denmark and in one week I was starting my first day of work in Jutland in a company that laid and connected fiber optic cables and such telecommunication things, the same as I do now in Norway”, he explains.

He considers himself a lucky person. During his time in Denmark, he could sell most of his furniture and his car in Iceland.

“If I had been stuck with a worthless flat and a car, since the loans were much higher than what I could have gotten for either, I would have been stuck there, in a prison of debt”, he says.

Two years later he got an opportunity to get a job in Oslo when he was sent there for work and took it.

Big unemployment, big migration

One of the main reasons that made the Icelandic people migrate to Norway and to other countries was the high unemployment that began to take place in the country by the ending of 2008 when the banking collapse took place. There is when people started to pack their things out of Iceland and a strong factor of the big migration that has been in the country these past years.

  • October 2008: 4,500 unemployed before the collapse.
  • March 2009: 13,800 unemployed 5 months after the collapse.
  • March 2010: 13,100 unemployed 1 year later.
  • March 2011, 13,500 unemployed 2 years later.
  • February 2012: 12,600 unemployed, last figure available.

Source: Statice Iceland.

Regarding this, Mr. Gylfi Arnbjörnsson, President of the Icelandic Confederation of Labour (ASÍ) is worried about the current situation of the country and sad that many people have to try their luck outside the country.

“One of the reasons why people left the country was because we reached an inflation of 18%, 95% of the financial sector collapsed and a 10% of our GDP also collapsed. The real income of the people fell back to 20%. When all this come together, when people have fewer jobs and less work, they tend to migrate”, says Gylfi Arnbjörnsson.

He thinks that the majority of the people have chosen Norway as their way out to escape from the finance collapse due to two reasons.

“One is because now Norway is growing a lot and it is easy to get a job there and wages are higher than in Iceland.” The second is because we are part of the Nordic countries and therefore we are part of the internal market in Europe established back in 1954. This means that there is a free movement of labor”, says Gylfi Arnbjörnsson.

Optimism in Iceland

The majority of the international media have pointed out a great recovery of the Icelandic economy. While in 2008 Iceland had a debt relief of 13 percent of their GDP (more than a quarter of the population) and their economy decreased by 6.7 percent in 2009, it grew by 2.9 percent in 2011 and it is expected that it will grow 2.4 percent this year and the next one, according to OECD figures.

Iceland’s approach to tackle the crisis has been based in imposing the needs of its population to the market ones in every step. Some people are improving their domestic situation, but there are still a lot of people facing difficulties.

(Click here to listen Mr. Gylfi Arnbjörnsson’s opinion on migration and unemployment in Iceland)

Mr. Gilfy Arnbjörnsson, President of ASÍ. Photo: Snorri Már.

Even though, Mr. Arnbjörnsson is not really satisfied about the government performance in the years of crisis and thinks that they haven’t done enough effort to promote job creation.

“The unemployment rate is going from 9.5% to 7%. No new jobs have been created in the last three years. Unemployment is decreasing because of emigration and not because of job creation”, says Gylfi Arnbjörnsson.

Mr. Baldur Arnarson thinks that the unemployment has to decrease to say that Iceland is in the good way of recovery.

“The official unemployment in February was 7,3%. If that figure go below 6% in the summer of 2012 it could be argued that Iceland is on the right track”, he says.

Gauti Jóhansson is not happy either with what the government is doing and thinks that what they have to see is that many standard and middle-class people are the ones suffering the most.

“People in power and people with money are optimistic and think that everything is about okay again. But the small companies are suffering together with the unemployed. More families stand in line every day to get food because they can’t afford to buy it”, he says.

Future generations

Taking a look at this migration phenomenon, one can think about the upcoming generations and their future, whether they will be lucky and get a job in Iceland or if they will have to follow the same steps taken by many people in the last years.

Jón Atli, Vice Chairman of the Student Council of the University of Iceland. Photo. Jón Alti.

Jón Atli is the Vice Chairman of the Student Council of the University of Iceland and also an optimistic young man. He clarifies that the situation among students is different than from the people in the labor market. And even though that the collapse harmed Iceland severely, he thinks that the economic scenery should improve in the upcoming years.

“The recession has hit us hard, but in students has been different. They are now learning and they go abroad to get a more prestigious degree and to study new cultures. They don’t go because of the recession”, he says.

Jón Atli also says that if even Icelandic people need to go to other countries, it is inside their DNA’s to go to other places to train themselves and improve their skills.

“It’s been in the history of Icelandic culture to go abroad and improve for ourselves. It’s somehow submersed into our culture to go abroad and do this”, he says.

In order to encourage the students to have a job in Iceland, so they don’t have to leave the country when they finish their bachelors, there a special student loan fund called LIN, that stands for Lánasjódur Íslenskra Namsmanna in Icelandic.

“This loan helps students here and the ones that want to leave the country. For Icelandic people it’s relatively easy to go within the Nordic countries. For job opportunities Norway, as well as Denmark, are pretty obvious choices.”

Another way to promote job opportunities among the youths is to try to maintain these loans and also recognizing some businesses when they pick students, as Jón Atli explains.

“We are trying to maintain the loans we receive from the government. With this loan a student receive the same amount of money that an unemployed person gets in a year. In the Student Council, we have also given recognition to a bank for hiring young people”, he says.

Getting back to Iceland?

Everyone has the desire of getting back to Iceland at some point, but the Icelandic people want to make sure that coming back home is not taking the wrong step into their land, as Gauti Jóhannsson thinks.

“I will get back only if I get a good, well payed and stable job. Maybe when the situation gets better but I am not so optimistic right now”, he says.

Mr. Gylfi Arnbjörnsson thinks that the decision of returning or not depends on each individual case:

“Historically in earlier crises we have seen that some tend to stay, but most of them come back. It depends on the personal situation of every person”.

Jón Atli stays optimistic thinking that the future generations might go abroad for a short period of time, but that they will end up working and doing their lives in Iceland.

“Some students are pessimistic, but I think that the majority are optimistic towards the future of the country. That is what we want to believe. If they can get a good job abroad they might stay for some years but most cases people come back”, he says.

About Carlos Encinas