Iceland public sector accounts for 96% of new jobs in 2025‑26

Between May 2025 and May 2026 Iceland added roughly 1,000 new jobs, of which 962 were in the public sector and only 38 in the private labour market, according to Elliði Vignisson, mayor of Ölfus. He described the pattern as a "public hiring spree" and warned that it contradicts the government’s claim of a "value‑creation boom."

Vignisson emphasized that public services remain essential, but financing them by extracting value from the private economy is problematic. He noted that the Central Bank of Iceland raised the policy rate to 7.75% in May, while investment fell 12% and household and corporate spending slowed. Public‑sector expenses rose 8.3% in the first quarter, outpacing revenue growth of 3.8%, leading to a deficit of 23.7 billion krona over three months.