Iceland is well-known for its good salaries and high standard of social care. But it would be wrong to say that poverty does not exist in the country. 

Just like anywhere in the world, you will find both wealth and poverty in Iceland. In 2017, the most recent report available, an estimated 8.8% of Icelandic people lived below the National Poverty Line. (World Bank). 

Compared to many countries, that rate is pretty “good.” (Any country with less than 10% of the population living below the National Poverty Line is in the wealthiest bracket of the World Bank Poverty report.)  

But some Icelandic people are going through financial difficulty. And the fact that poverty rates are relatively low doesn’t make life any easier for people struggling to pay their bills.

What Does Poverty Look Like In Iceland?

It’s worth considering that definitions of poverty vary across the globe. 

So what we call poverty in Iceland may not look the same as what we call poverty in a country like Haiti or Afghanistan. 

In Iceland, a household is typically considered poor if the earnings come below standard living costs. So if an Icelander were living off-grid and producing their food, they could be wrongly classed as living in poverty even if they have more than enough disposable income to thrive. 

But that doesn’t mean that poverty in Iceland does not exist. Some Icelanders are indeed hungry and/or homeless. 

Health Care 

In some contexts, poverty can also be measured in terms of access to health care and education. In Iceland, health care is mainly paid for with the central tax fund, with patient contributions being capped each month. 

Dentistry and mental health treatment are not as accessible in Iceland. As these are not covered in the same way, and poorer people in Iceland can not always access the treatment they need. For under 18s and expecting mothers, health care costs are partially or fully subsidized.  

Education

Compulsory education (for students aged 6 – 16) is free for Icelanders, and University Tuition is also free. (But students do have to pay some signup fees for their degree). So although there is poverty in Iceland, this does not necessarily exclude people from education or healthcare in the same way that it can elsewhere. 

Homelessness In Iceland

While it’s important to acknowledge that Icelandic poverty may not look the same as poverty in other places, that doesn’t mean that we should take it lightly. 

Homelessness, while still low, went up by 168% between 2009 and 2017, according to the OECD. There hasn’t been an official report releasing the number of homeless people in Iceland since the 2011 census. 

This is particularly dangerous in a country that experiences such low temperatures in the wintertime, but you don’t see people sleeping on the street around this time. Instead, the homeless people will go to one of the shelters in the city. 

Homelessness in Iceland is primarily due to rising unemployment and a lack of affordable housing. Most homeless people are elderly. While addiction sometimes plays a role in homelessness, this is not always the case.  

Unemployment In Iceland

According to Statista, the 2019 unemployment rate in Iceland was 3.98%. While this isn’t high, social expectations about Icelanders being good workers make it particularly difficult for Icelanders that find themselves without work. 

Compared to some countries in Europe, like Spain and Greece, unemployment in Iceland is very low.  Spain and Greece have an unemployment rate of around 15%, and the average unemployment rate in Europe was 7.1% as of June 2021.

Final Thoughts 

Poverty is a complex subject. Only the people living in poverty can genuinely understand how it feels and what it means. 

Generally speaking, poverty is low in Iceland. There is a high level of education, and access to healthcare is subsidized by taxpayers. Unemployment and homelessness rates are low, even if they are growing. 

That doesn’t mean that poverty doesn’t exist in Iceland. Nearly 9% of Icelandic people live at risk of poverty, and access to dentistry and mental health support can be challenging. 

Overall, Iceland is a wealthy and stable country. But just like anywhere, some people don’t see the benefits of the GDP. The high cost of living and lack of affordable housing means that some people inevitably struggle to meet their basic needs. 

We hope this article answers all of your questions. For more information about Iceland, don’t hesitate to explore the rest of the Play Iceland site.