Youth unemployment in Iceland rises to 17.3%

Unemployment among people aged 16 to 24 reached 17.3% in the second quarter of 2026, up from 7.6% in the same period last year, according to Statistics Iceland, mbl.is reports.

Róbert Farestveit, head of the economics division at the Icelandic Confederation of Labour (ASÍ), said the increase was one sign of a cooling economy. He pointed to a sharp decline in advertised vacancies in the construction industry and said fewer student and summer jobs may also be affecting young people.

Statistics Iceland said figures for this age group are more volatile than those for other age groups. It also noted that students are often looking for summer work during the second quarter.

Farestveit said ASÍ was concerned about the labour market outlook over the winter, although it expects conditions to improve next year. He said young people could be temporarily hit harder than other age groups, and that unemployment in the third quarter would likely follow the same trend as in the second.

Recent layoffs have yet to appear in employment and unemployment figures, Farestveit said. He added that Statistics Iceland’s unemployment measure includes people who want and are able to work, while the Directorate of Labour counts only those it considers eligible for benefits.