Reykjavik offers no new jobs after latest layoffs
Tuesday 27th October 2026 on 17:31 in
Iceland
Reykjavik will not offer alternative positions to employees receiving dismissal notices in its latest round of cost-cutting, the city’s executive council chair, Einar Þorsteinsson, told mbl.is. The measures will eliminate 74 full-time positions, with 50 employees receiving dismissal letters.
Þorsteinsson said the cuts mark the third and final round of measures involving mass layoffs. Unlike an earlier round, the latest changes are not part of a restructuring, but aim to reduce central administration overhead without cutting services directly provided to residents.
In August, 86 employees were dismissed and 32 were offered other jobs within the city. Twenty-nine accepted those offers. No alternative positions will be offered to those dismissed in the latest round, Þorsteinsson said.
He expressed sympathy for the employees affected and said the cuts would not reduce services for residents. He also stressed that the jobs being eliminated were held by people who had worked with dedication, ambition and professionalism, and did not describe the positions as unnecessary.
Þorsteinsson said the measures were needed because of the city’s financial position. Persistent inflation, high interest rates and rising unemployment were affecting its operations, while lower employment levels in Reykjavik meant payroll tax revenue was not increasing as it had in previous years. Property tax revenue was also no longer rising at the same rate.
The city needed to examine its administration and find savings to make room for projects that directly benefit residents, he said. These include building new preschools and primary schools, housing facilities for disabled people, infrastructure maintenance and investment in facilities for sports clubs, older people and cultural institutions.
Þorsteinsson said the mass-layoff measures were now complete, although the city’s cost-cutting group would continue working on other projects. He said he wanted staff to be able to look ahead to the coming months without fearing further layoffs of this kind.