Resilience: strengthening Iceland’s foothold – Resilience subsidies and support for job-seekers, old-age pensioners, families with children, and vulnerable groups
The Government has decided to pay a special supplement over and above basic unemployment benefits next year, so as to support the large group of people whose income-linked unemployment benefits will expire in the next few months. The 2.5% supplement will be paid in addition to the 3.6% increase provided for in the 2021 fiscal budget proposal. With these increases, which total 6.2%, basic unemployment benefits will equal ISK 307,403 per month.
Increased payments for support of job-seekers’ children will be extended through the end of 2021, with a 6% supplement added to basic unemployment benefits for each child instead of the previous 4%. Moreover, a December supplement of just over ISK 86,000 will be paid to confirmed job-seekers.
Resilience subsidies will help society to be better prepared for the time when global economic activity opens up again. The resilience subsidies are a direct continuation of the revenue loss subsidies. They are intended to help companies maintain a minimum level of activity while the impact of the pandemic persists. The measure applies to all taxable entities that suffer at least a 60% loss of revenue, irrespective of their operational form. It applies as well to sole proprietors who conduct business activities under their own national ID number.
For entities suffering revenue losses between 60% and 80%:
- The maximum subsidy ranges up to ISK 400,000 per monthly full-time position equivalent
- Capped at ISK 2 million
For entities suffering revenue losses between 80% and 100%:
- The maximum subsidy ranges up to ISK 500,000 per monthly full-time position equivalent
- Capped at ISK 2.5 million
The subsidy amounts are based on operating expenses but may not exceed the amount of the revenue loss during the period in question.
In the case of substantial revenue losses suffered by sole proprietors or very small businesses whose operating expenses consist largely of their estimated salary, the entity is authorised to base operating expenses and the number of full-time position equivalents on figures from the same month in 2019.
Support for families with children
The means testing threshold in the child benefits system will be permanently raised, thereby ensuring that it changes with developments in the lowest wages in the labour market. This change will ensure that single parents with two children and a monthly income of ISK 350,000-580,000 will receive an annual increase of ISK 30,000 in child benefits, and that for a family whose combined monthly income is ISK 700,000-920,000, child benefits will be ISK 60,000 higher than they would be otherwise.
Support for disability pensioners and vulnerable groups
A one-time payment of ISK 50,000 will be made before 18 December to recipients of disability and rehabilitation pensions who are eligible for pensions during the year, in addition to the December supplement that is usually paid during the month. At the beginning of 2021, permanent changes will be made to the disability pension system. Internal reductions will be scaled down, and the lowest-paid disability pensioners will receive a supplement of nearly ISK 8,000 per month in addition to the planned 3.6% increase provided for in the fiscal budget proposal. The total increase in social security benefits for the lowest-paid disability pensioners will therefore be nearly ISK 20,000 at the turn of the year.
In addition, a range of mitigating measures will be adopted so as to strengthen vulnerable groups during the pandemic, and a response team on households’ financial position will be established. Members of the response team will include representatives from financial institutions, stakeholder groups, and the Debtors' Ombudsman.
Further information on the Government measures can be found here:
- Resilience: Strengthening Iceland’s Foothold – measures announced 20 November 2020 (In Icelandic)
- Slide presentation on continuation of Government measures: Slide presentation (In Icelandic)
- Information on active Government measures in connection with the pandemic can be found on Viðspyrna.is.