Addressing Unprecedented Poverty in Iceland


REYKJAVIK, Iceland — In Iceland, a Nordic country which lies in the North Sea in between Norway and Greenland, close to 6,200 people currently live in severe poverty, according to reports published by Rúv (, Iceland’s national broadcasting service.

An even larger nine percent of the country’s population of 323,000 are also defined as low-income earners, bringing home less than ISK 170,000 (US $1,270) a month in disposable income.

The results of the survey reveal the existence of historically unprecedented levels of poverty in Iceland, a nation not often associated with global poverty.

A country that was listed as having the lowest proportion of people at risk of poverty in Europe in 2012 (just above Norway), and a country that has one of Europe’s highest minimum wages and highest costs of living, the rise in poverty levels has indeed come as a great shock to many Icelanders.

The existence of rising levels of poverty within the country is made less surprising, however, when one considers the effect of the 2008 economic crash on the Icelandic economy and other recent events which have served to turn the traditional first-world society on its head, such as modern-day migration.

A UNICEF report entitled Children of the Recession: the Impact of the Economic Crisis on Child Well-Being in Rich Countries, published in 2014, for instance, revealed that the economic crash affected Iceland the most out of all the OECD countries.

According to the report, the crash caused Iceland to lose nine years in income progress, resulting in the country undergoing a “great leap backwards” comparable to those experienced in nations such as Ireland, Spain, Italy, Hungary and Portugal.

The crash also dramatically affected levels of child poverty, which increased by more than 20 percent from 11.2 percent in 2008 to 31.6 percent just four years later.

This finding also correlates to an increase in foreign migration into the country, with seven percent of the Icelandic population now constituting foreigners (mainly Poles) compared to only 2.6 percent in 2000.

The recent change in Iceland’s demographics has in turn served to alter the nature of Icelandic society, which has traditionally been extremely isolated and homogenous — constituting a near-identical population that can trace their heritage to Norweigan Vikings and various Celtic tribes.

The extent of Iceland’s historically isolated disposition is best exemplified, for instance, by the creation of an Icelandic Incest Prevention App, which lets strangers flirting in a bar know the percent to which they might be related to the person sitting next to them by bumping their phones together.

Given Iceland’s unique historical isolation from the world, the report discovered that recent migration has affected levels of poverty by serving to change both societal realities and societal attitudes.

The influx in migration, for instance, was found to directly correlate to a rise in poverty levels, with poverty increasing most dramatically among migrant households — affecting migrant children twice as much as native Icelander youths.

Stating that in many cases, “average comparisons hide the scale of the situation”, the helped to illuminate the sudden rise in poverty levels by citing the way in which those living in poverty are obscured by their richer, more traditional Icelandic neighbors.

As a corollary to this, the investigation also revealed that there has been an increase in anti-immigrant sentiment throughout the country, as well as a widening income gap.

In recent years, however, there has been some improvement in Iceland’s novel levels of poverty. This has been achieved in part by the government’s decision to replace Iceland’s flat tax with a progressive tax structure and to increase child benefits between 2012 and 2013.

Siv Friðleifsdóttir, head of the Welfare Watch and former minister for the Progressive Party, also says that the country is working to further reverse the effect of Iceland’s unfortunate great leap backward.

According to Mr. Friðleifsdóttir, the first step to achieving this is to pay a base amount in child benefits, which is not fixed to income, as is done in other Nordic countries as well as proposing an increase in child benefits of ISK 4 billion (U.S. $30 million) per year.

The Ministry of Iceland’s Welfare Watch is hopeful that such initiatives will be successful in enabling all of Iceland’s children — including non-traditional migrants who may live in lower-income households — to climb out of the country’s sudden, and unprecedented, chasm of poverty.

Ana Powell

Sources: Daily Beast, Go-to-Iceland, Grapevine, Iceland Review 1, Iceland Review 2, Statistics Iceland 1, Statistics Iceland 2
Photo: Flickr


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