RT January 30 2014
Iceland is the land of active volcanoes and unexpected decisions. During the crisis in 2008 the government let its banks collapse instead of bailing them out, as they proved too big to save. The next challenge is to bring unemployment rate to 2 percent.
Iceland, whose stock market after the 2008 financial crisis plunged 90 percent while unemployment rose ninefold, has chosen a risky crisis-management policy as a way-out. After shrinking by over 10 percent during 2009-2010, Iceland’s GDP began to recover.
During the worst financial crisis in six decades, successive Icelandic governments forced banks to write off mortgage debts to help households, and while the euro area struggles with record unemployment rate (with over 25 percent in Greece and Spain), Iceland has a reason to celebrate, with joblessness in December as low as 4.5 percent, according to Statistics Iceland. The number of persons in the labor force in the fourth quarter last year was 184,600, which corresponds to an activity rate of 80.7 percent.
The prime minister recently announced that the next big challenge for the small island nation with the population of 325,620 is to see unemployment going to under 2 percent, because, as Sigmundur D. Gunnlaugsson told Bloomberg in January, “Icelanders aren’t accustomed to unemployment.”
At 85 percent, Iceland’s labor-market is the highest in Europe and one of the highest in the world. In December alone, 172 new private limited companies were registered in the island, compared with 147 in December 2012. The largest number of new registrations was in financial and insurance activities. In 2013, 1,938 new private limited companies were registered, which is a 10.6 percent increase compared with 2012.