Social objectives
  • Ísland 2020 – sókn fyrir atvinnulíf og samfélag

Social objectives: Welfare, knowledge, sustainability


The objective for 2020 is for Iceland to become a fully-fledged member of the group of Nordic welfare states, which guarantee social security and the equality of citizens. Good education standards, high levels of employment and the active participation of citizens, irrespective of their place of residence, status or gender are prerequisites for this to succeed. The only certainty we have about our future is that there will be great changes in our immediate environment over the coming years. Technological development advances rapidly and this is just as true of social development. Changed family patterns, the number of new citizens of foreign origin, cultural class divisions and the large volume of work undertaken by parents away from home create the need to think about our well-being no less than our prosperity. A sound education and universal equality are the preconditions that will enable the nation to successfully embrace this future.

There are many indications that we need to look to more than prosperity to guarantee the basis for a good society. In 2006, Icelanders' life satisfaction was close to the OECD average and had been so since the beginning of the decade. During the same period there was a general increase in life satisfaction in OECD member states. The great prosperity that Icelanders had experienced did not therefore translate into an increase in life satisfaction.  Over the past years, inequalities have greatly increased and grown more rapidly than in other OECD countries. The Gini coefficient, which measures inequalities on a scale of 0 to 100 (or according to how the combined income of every individual in the country is distributed) increased by 104% between 1993 and 2007. The coefficient would be 100 if the same individual held all the income and 0 if everyone had an equal income. In 2009, the Gini coefficient in Iceland was close to 30. This is actually one of the steepest increases to have been observed in a western economy. It is therefore important for the government to focus its policies for the future on a more even distribution of quality in the community and to boost the balancing effects of transfer payments and the tax system towards that goal.

Quality of life revolves around, among other things, the welfare of individuals, their health and income and improving their social status. The general state of health is good in Iceland, life expectancy after birth is as high as can be, infant mortality is lower than in most other OECD countries, and the percentage of people who are considered to be in good health is also high.  There is, nevertheless, a pressing need to make improvements in society so that citizens can easily make informed decisions about healthy lifestyles. It is important that all government policies and measures be evaluated with regard to welfare. The promotion of health and preventive measures that contribute to improving public health will be reinforced, with a special emphasis on alcohol and drug abuse prevention, nutrition, exercise, and sexual and mental health. It is important to measure progress when it comes to subjective factors such as health perceptions in an objective manner.  

Even though Iceland rates high in terms of its equal rights position in the world, when compared to other countries, it still has some way to go before full equality can be said to have been achieved. In 2006, Iceland measured at a value of 0.78 on the Global Gender Gap Index, in 2009 at a value of 0.83 and in 2010 at a value of 0.85, and Iceland ranks first according to this international classification. In order to be able to say that full equality has been achieved, the value needs to reach 1, which is Iceland's long-term goal.  There is a need to continue on the path that has been set and to incorporate the gender mainstreaming perspective into government policy making and employment creation measures. Maintaining one of the highest labour force participation rates for women in the OECD countries requires special consideration to the status of both sexes in the labour market, the balance between work and private life, and the framework for children and young people within that context.

The number of people living with disabilities has increased over the past years and there are a variety of reasons for this, including, among other things, the rising average age of the population, altered social patterns, a rise in the diagnosis of mental illness and increased strain on the labour market. About half of the people with the disabilities are generally satisfied with their lives. More than half of them consider the state of their health to be poor and about half of them again are dissatisfied with their financial positions. The weighing up of all these factors reveals that the position of the majority of people with disabilities is not satisfactory enough and, in their own estimation, only 8% of these people consider themselves to be in a good position in terms of their health, finances and life in general.  

In view of the above one can therefore see that there is a strong need for more part-time jobs tailored to the skills of people with impaired working abilities, as well as a more flexible and understanding labour market and employers. There is a need to increase resources, training and guidance and to consolidate and optimise existing services. Above all, people have to be kept active. The majority of people with disabilities are women and people with little or no secondary education. The vast majority have some experience of the labour market, but have been on disability pensions as the result of an accident, trauma or illness contracted as adults. Many live in poverty, social isolation and tight finances. It is important to take these elements into account when working on structures and strategies relating to the compensation system and competency assessment, as well as efforts to increase activity and the employment participation rate.

Iceland is a knowledge society. The percentage of people of a working age is high, as is, from an international perspective, the level of labour force participation, particularly among women and people over the age of 65. However, the dropout rate from secondary schools is a serious concern. The number of people of a working age who have only completed their primary education is an equal source of concern. In the wake of the economic crash, unemployment rapidly soared, particularly among young people and the less educated. It is crucial to ensure that these groups are given access to schooling or other forms of education, continuing education and support to prevent long-term unemployment from taking root. Long-term unemployment cannot be prevented without targeted measures and major efforts to guarantee a broad range of study and continuing education opportunities, as well as flexibility and security on the labour market.

Social and occupational patterns have undergone rapid transformations and we can expect that development to continue. The contribution of primary sectors such as fishing, fish processing and agriculture to the gross domestic product (GDP) has contracted over the past years and accounted for approximately 8% of the GDP in 2008. It is not known whether this trend will persist, since the weight of the primary sector has increased again in the wake of the economic crisis. Traditional industry has remained stable over the past decade and in 2008 accounted for 16% of GDP. The construction industry accounted for 12% of the GDP, but it is clear that this was about twice the size of what could be sustained in the long term. The remaining 64% of the GDP emanates from the services sector, some 26% of which comes from financial services. Tourism and creative industries have grown exponentially. The companies and employment opportunities that will yield good wages in the future are likely to mostly flourish around industry and services, including the high-tech and knowledge industry, biomedical sciences, tourism and creative sectors.

For a small modern economy such as Iceland's, knowledge and innovation are particularly important. There are opportunities for innovation in all areas of the economy, but not least in the production of agricultural and marine products, since a dynamic knowledge environment promotes innovation in a market that is receptive to modernisation. The Science and Technology Policy Council places a particular focus on these challenges and lays down a policy that puts Iceland at the forefront of research and innovation.  The policy is aimed at boosting research and investigative studies at universities and institutions, by making better use of available facilities and making it easier for companies to participate in research and apply its findings. Supporting research-linked innovation and inter-disciplinary cooperation between start-up companies, universities and research institutes can generate added value for the economy as a whole.

The heightened emphasis on the services sector, ingenuity and creativity is sensible. People who use e-business and electronic communications are calling for universal access to high-speed connections, and a great deal of progress has been made on that front over the past years. Access to the internet and its use is very widespread in Iceland and among the best there is. Technological infrastructures, human resources and IT skills are of a high standard, but the offer of electronic public services is still by no means sufficient, and the use of information technology to enable the public to participate in the democratic decision-making process is not satisfactory. This situation is very clearly reflected in international surveys and constitutes an opportunity, since in 2010 Iceland ranked 22nd on the E-government development index and ranked 135-143rd in the E-participation Index  which is compiled by the United Nations every year. There is a demand for electronic services and they need to greatly increase, particularly in the field of public e-services. The government policy, which goes under the name Iceland, the e-nation is a road map for the development of e-government and the use of information technology between 2008-2012.   

Iceland's contribution to research, development and innovation now accounts for 3% of GDP, which is a considerable amount and on a par with other knowledge societies. However, this investment does not seem to have resulted in sufficiently better results for companies. The solution does not lie in a unilateral increase in government contributions, but rather in strengthening the capacity and resolve of the companies themselves to further research, development and innovation. This can be done through mutual research funds or other incentive measures, such as tax incentives, and by cultivating a more favourable environment for innovation and, in doing so, boost value creation and exports.  

Sustainable development has to be focused on three main areas: the economy, community and environment. Sustainability can only be considered to have been achieved when there is positive growth in all of these areas. It is important to bear this in mind, particularly when thinking about the exploitation of natural resources to develop the economy or enhance the quality of life. There is a need to guarantee the responsible and sustainable exploitation of natural resources as well as the competitiveness of the economy. Sustainability in the area of food revolves around, among other things, the use and production of domestic agricultural supplies such as fertilisers, fodder and energy/oil.  Increased domestic food production boosts sustainability and generates employment. It is important to ensure that the dividends that derive from common resources are maximised in the long term and benefit society as a whole, both directly and indirectly.  

Resources and energy policies must be founded on sustainability, be aimed at strengthening the security and welfare of society, yield benefits, and enjoy a broad long-term consensus. An important premise for this consensus is to ensure that in each instance the nation receives a reasonable return on common resources and to preserve an equilibrium between security and efficiency considerations. The interests of future generations need to be borne in mind in the formulation and implementation of policy, and nature and the environment have to be left as unspoilt as possible. Unspoilt nature is also a resource, which yields both tangible and intangible benefits to, among other things, tourism and outdoor activities in general.

Eco-innovation applies to any form of innovation that leads to a better environment, sustainable development and the optimal use of resources throughout their lifespan. The market for eco-friendly goods and services is rapidly growing. According to research conducted by the OECD, their value now accounts for 2.5% of the GDP of EU member states. There are many opportunities that Icelandic companies can seize in this area, thanks to, among other things, their flexibility and the positive image enjoyed by Icelandic nature. Most countries are having to grapple with vast environmental problems, due to, among other things, high greenhouse gas emissions, accumulated waste and stresses on the ecosystem. Eco-innovation presents Iceland with unique opportunities and significantly contributes to sustainable development.    

In order to monitor how successfully Iceland is moving towards becoming a dynamic society founded on welfare, knowledge and sustainability, the following 15 concrete objectives have been set for the next ten years:

  1. To reduce the percentage of people (aged 18-66) with disability from 7.3 % of the population to 5.7% by 2020.
  2. To reduce the unemployment rate from 7% in 2010 to 3% by 2020. 
  3. To achieve greater equality in Iceland, by lowering the Gini coefficient for disposable income to around 23 by 2020. 
  4. To narrow the gender gap in order to bring the Global Gender Gap Index close to 0.9 by 2020. 
  5. To improve well-being and sound mental health so that the average measurements on the well-being index rise from 26,6 in 2009 to 28 in 2020. 
  6. To reduce the percentage of Icelanders aged between 25-64, who have not received any formal secondary education, from 30% to 10% by 2020. 
  7. That 4% of the GDP shall be allocated to research and development. The investment by the private sector shall be 70% against a 30% contribution from the public sector through contributions to competitive funds and research programmes.
  8. That by 2020, Iceland be in the top 10 nations on the E-government development index and E-participation Index measured by the United Nations. 
  9. That by 2020, the high-tech industry will account for 10% of the GDP and 15% of the value of exports.
  10. That a minimum of 10% of the fuels used in the fisheries industry will be eco-friendly by 2020 and that 10% of all fuels used in transport will be eco-friendly.
  11. That by 2020 Iceland shall have made commitments comparable to those of other European nations with regard to the United Nations' Framework Convention on Climate Change and that net emissions excluding ETS will decline by 38% from the year 2008.
  12. That eco-innovation and its products be the main growth sector of this decade, with an annual growth in turnover of 20%, which will double between 2011 and 2015.
  13. That by 2020, 75% of new vehicles weighing less than five tons will run on renewable energy.
  14. That the percentage of domestic food consumed by Icelanders will have increased by 10% by 2020.
  15. That by 2020, the skills of Icelandic elementary school pupils be comparable to those of the top 10 nations classified by the OECD Programme for International Student Assessment (PISA) in the domains of reading and mathematical and scientific literacy.