Skills and Labour Market Integration of Immigrants and their Children in Iceland

Relative to its population, Iceland experienced the largest inflow of immigrants over the past decade of any OECD country. Four out of five immigrants in Iceland have come from EU and EFTA countries, although there has been a recent increase in humanitarian arrivals. Employment rates are the highest in the OECD, for both men and women, reflecting the recent and labour market oriented nature of most immigration to Iceland. However, immigrants’ skills are often not well used, as witnessed by the high rate of formal overqualification. What is more, immigrants’ language skills are poor in international comparison and there is evidence of growing settlement of immigrants. Against this backdrop, Iceland is at a turning point in its integration framework, and seeks to develop a comprehensive integration policy for the first time. This review, the fifth in the series Working Together for Integration, provides an in depth analysis of the Icelandic integration system, highlighting its strengths, weaknesses, and potential areas for improvement. Earlier reviews in this series looked at integration in Sweden (2016), Finland (2018), Norway (2022) and Flanders (2023).