Employment

Historical developement

Although fisheries have been conducted off Iceland since the time of settlement, an independent fishing industry isn’t very old. The sector can only be identified as an independent part of the economy from the mid 19^th century. Prior to that time, fisheries were largely integrated in the Icelandic agricultural sector; the landlord’s workforce was utilized for fisheries on rowing boats in the wintertime and for the usual agricultural work during the summertime. See more on this on the pages on fishermen in the age of rowing boats.

In the beginning of the 19^th century, Icelanders had their first decked vessel and around 1850 there were about 30 of these; thereby the sector was bound for its independence. Simultaneously, a higher ratio of the population had full time employment in the fishing industry and lived all year round in small villages along the shoreline. It can be argued that fisheries and fish processing were, therefore, the base for rural development in Iceland. Around 1900, there were about 150 decked vessels, and an increasing proportion of the population was employed in the fishing sector. In 1905 the first trawler was bought by an Icelandic company. From that time onward, the evolution of the fishing industry accelerated. This is further discussed on the pages on the age of motor.

Developement in the 20^th century

Early in the 20th century, an increasing ratio of Icelanders were involved in the fishing industry. In 1930 official numbers reveal that 23% of the population on the labour market (in man-years) were employed in the fisheries sector. However, since then the contribution of the fishing industry to total man-years in Iceland has been decreasing, despite the fact that the quantity of fish has increased during the entire 20^th century.

Numbers from 1930 to 1960, recorded at ten year intervals, show growth in the number of people working in the fisheries sector from 12 to 15 thousand. Then the number declines due to the collapse of the herring stocks but increases again after 1970, with the arrival of the stern trawlers and a subsequent rapid rise in catches. The highest number of people working in the fishing industry was in the 1980´s about 16 thousand employees. After that the number of people has declined constantly to the current level of about eight thousand. The contribution of the fishing industry to total employment has fallen steadily for a much longer time, or from 23% in 1930 to the current level of about 4,1%. It is expected that the impact of fisheries on the labour market will continue to decline; with innovations in processing/harvesting and further growth in the service sector.

Regional employment

Regionally, the highest number of people employed in the fishing industry is in the northeast, the southwest and the area of the capital. This is ranking remains unchanged in 2000 and 2005, but the total numbers have declined in all regions.

A very different picture emerges when the percentage of people employed in the fishing industry in each region is compared. It is least important in the capital area but most important in the Westfjords region. Although the fishing sector contribute only 4 to 10% of all man-years in the economy as a whole, the sector is much more significant outside the capital area. Nevertheless, there is a steady decline in all regions of the country from 2000 to 2005.

Vages

Historically, the fishing sector has offered higher wages than most other sectors of the economy and this is still the case. Fishermen’s wages are in part proportional to the total value of the catch and this makes their wages subject to fluctuations. When the Icelandic economy is gaining strength, the Icelandic króna (ISK) is normally strong. As the value of the catch is related to the export value, the fishermen then get relatively lower wages. During recessions, when the króna weakens, the opposite happens, a higher ratio of Icelandic currency flows through the hands of the fishermen, raising their wages. This special characteristic of the fisheries sector relates to the fact that the bulk of Icelandic fish products are exported to foreign countries, injecting the economy with cash in times of weak ISK and raising crew wages in Icelandic kronur. Due to this, the fishing sector may be regarded, in a sense, as an economic stabiliser.

However, fish processing does not work in the same manner; employees in the processing sector receive their wages independently from the ISK exchange rate. The wages in the fish processing industry are more closely linked to the total catch, than the export value of the catch. The more catch, the more work with higher bonuses (if they work faster) and more overtime opportunities. Normally payments in the processing sector are lower than in fishing; more similar to wages in other industries in Iceland.

These effects on the fishing industry can be seen when the years 2002 and 2005 are compared. Economic growth in 2002 was negative (-0.1%) and the ISK currency was weak (year average: ISK/EUR=86). On the other hand, in 2005 both the ISK currency (year average ISK/EUR=78) and economic growth were strong (7.4% growth). Fishermen wages were substantially higher in 2002 than 2005. Furthermore, they were almost twice as high as average wages in the entire economy in 2002, whereas the difference was much lower in 2005.

Wages in fish processing are similar to average wages in the economy as a whole. In 2002 they were a little lower, but slightly higher in 2005. This can possibly be explained by increasing mechanisation in fish processing and therefore fewer but better paid hands are needed. It is also possible that higher catches of demersal fishes in 2005 than 2002 could explain this increase.

References and further information

For full citation and further information on the economy in general see this page

Jón Þorvaldur Heiðarsson, University of Akureyri

Hörður Sævaldsson, University of Akureyri