Iceland’s highly educated workforce, skilled labor, and strategic position make it an excellent outsourcing destination. Employers seeking to hire in the country may wonder, what is the average salary in Iceland? This information will help them make a competitive offer. 

The average salary Iceland is 635,000 Icelandic Krona (ISK), about USD 4579. However, salaries vary depending on experience, education, location, position, and industry. You must also consider the median wage and salary range.

This article will review all aspects of salaries in Iceland to provide comprehensive insight.

Table of Contents show

What is the Average Salary in Iceland?

The average salary Iceland is 635,000 ISK, which translates to about $4579. The country has a robust labor market characterized by strong union power. The small population fuels demand supporting higher salaries. 

Median Income Iceland

When comparing the average vs. median salaries in Iceland, the average salary is the total wages in the country divided by the total number of workers. The median salary, on the other hand, is the middle salary. 

Iceland’s median monthly income is 635,157 or $4582. Half the people in the country earn higher salaries, while the other half earn lower wages. 

Salary Range

The salary range spans from the lowest to the highest in the country. Low earners earn about $2660, or 368,800 ISK, while high earners earn close to 1 million ISK (approximately $7213).

Wage Growth Trends in Iceland

Wage growth has fluctuated in Iceland over the past few years, but the trajectory has remained firmly skywards. According to the latest stats, monthly wages grew by 1.8% in April 2025, which was the fastest pace in the past three months. Over the annual period, ending in March 2025, the rise in salaries averaged 3.4%. If measured in Euros, the actual increase between 2008 and 2019 amounted to 84.4%, demonstrating Iceland’s ability to cope with the rise in the cost of living.

Overall wage growth is actually up by 7.6% throughout the first quarter of 2025, compared to the same quarter last year. Some of this can also be attributed to the brand-new wage scales implemented through collective agreements that came into effect at the start of April 2025.

What this all means is that even though inflation is falling and the labor market remains tight, employers are taking significant steps to ensure Icelandic salaries keep up with the cost of living. Current trends indicate that Iceland is likely to remain towards the top of Europe’s average wage rankings in the coming years.

Official figures project what could be in store for the country’s workforce in the years to come. According to figures from Íslandsbanki, real wage growth has been projected at:

YearProjected Inflation Rate
20251.4%
20261.7%
20271.2%

In contrast, nominal wage increases are expected to soar by 5.1% in 2025, 4.7% in 2026, before slowing down to 1.2% in 2027. These predictions show us that the economy has stabilized in the aftermath of the COVID-19 pandemic and remains firmly on the path to expansion.

According to the bank, they say that the primary growth indicators are a recovering economy, with Icelandic exports being a particular bright spot, and the easing of monetary policy as the inflation continues to fall. Of course, this could all change if any further economic shocks are registered.

Salary Comparison by Profession

The following salary comparison chart will list the monthly income of different industries in Iceland.

IndustryAverage Monthly Income
Tourism and Hospitality600,000 – 800,000 ISK
Fishing and Marine Industries600,000 – 800,000 ISK
Renewable Energy700,000 – 900,000 ISK
Technology and Innovation800,000 – 1,000,000 ISK

Average Wage in Iceland by Education

Education is an essential variable in Icelandic salaries. Statistics show:

  •  Individuals with an upper secondary education earn 10% more than those with a basic education.
  •  Workers with a tertiary education earn about 39% more than those with a basic education. 
  • Those with a doctorate earn about 54% more than workers with a bachelor’s degree. 

Salary Comparison by Experience

Experience factors into wage determination. Union reps bargain for higher starting salaries for experienced individuals. People who gain tenure are also eligible for raises. For example, workers who work at least twelve weeks for the same employer within a year are eligible for a bonus. 

Salary Comparison by Location

Location is another critical variable in salary determination. The following wages comparison shows how location impacts salaries:

  • Reykjavik: Workers living in Reykjavik and the capital region tend to earn high salaries due to the high cost of living and proximity to major corporations offering high-paying business opportunities. Salary averages are around 850,000 ISK monthly. 
  • Western Iceland: Salaries are lower in Westfjords, Snaefellsnes, and the West region, averaging around 675,000 ISK monthly—most people in the region work in the fishing industry. 
  • Southern Region: LIke Reykjavik, the South and South-East regions also see their share of large companies and vibrant economic activity, specifically in Selfoss and Hofn. However, the cost of living is lower. Therefore, salaries are slightly lower, averaging around 700,000 ISK. 
  • Eastern Iceland: Residents in areas such as Eastfjords and the East region earn average salaries of 675,000 monthly due to a lower cost of living. 
  • Rural Areas: Rural workers earn salaries of around 625,000 monthly due to fewer job opportunities and lower living costs. 

How Much is Minimum Wage in Iceland?

Iceland does not have a standard minimum wage. The trade union the employee belongs to sets the minimum salary based on the employee’s age and job type. However, wages rarely dip beneath 368,000 ISK (approximately $2654).

Gender Pay Gap in Iceland

The gender pay gap is something many countries are looking at narrowing. Iceland has been one of the standout performers in this category, being one of the first nations to make closing the pay gap a target.

It’s why the country has laws requiring employers to obtain an Equal Pay Certificate and renew it every three years. Additionally, any business with at least 50 employees must go through a formal certification process via an independent body.

The country’s commitment to closing the gender pay gap has meant that it’s once again reached the top of the Global Gender Gap Index in 2025. However, just because it’s made massive strides in achieving parity across the genders, that doesn’t mean the pay gap has been closed entirely.

According to Statistics Iceland, the unadjusted gender pay gap remained at 9.3% in 2023. This figure takes into account hourly total regular wages to arrive at its conclusion. In short, although economic participation, pay, and opportunity have reached close to parity, Iceland still has a long way to go. To be fair, though, no country has come as close to closing the gender pay gap, and Iceland remains the outlier on the world stage in this respect.

The country’s dedication to closing the gender pay gap is part of the government’s commitment to achieving gender parity across all sectors of society. Efforts within the labor market include laws to encourage more women into leadership roles and achieve higher workforce participation. On the latter, it has achieved great success, with Iceland boasting one of the highest female workforce participation rates in Europe.

Cost of Living and Purchasing Power in Iceland

Iceland’s high cost of living is legendary. Unsurprisingly, much of Iceland’s problem is that practically everything must be imported into this geographically isolated country. Although Iceland took a beating during the Great Recession of 2008, the country has roared back to become the 2nd most expensive country in Europe, with only Switzerland beating it out.

The cost of living remains high, but so does its purchasing power because of its strong economy. The Consumer Price Index (CPI) might have risen, but real purchasing power and disposable income have also risen, with the economy expected to top $35 billion in GDP in 2025. If we look at Iceland’s GDP per capita, it was last recorded at $81,215 USD, which is the 8th highest in Europe.

Any cost of living survey will always see Iceland coming close to the top of the list, alongside the other Nordic countries, with some estimates placing it not just as the 2nd most expensive place to live in Europe but the 3rd most expensive on the planet. Currently, the CPI rests at 656.5 points in June 2025, a 0.84% increase over May.

Naturally, prices are the highest in the capital of Reykjavik, with smaller towns around the country seeing lower prices. However, even the cheaper parts of Iceland would still rank as far more expensive than most towns and cities in Europe.

Let’s look at a few examples of how costs can differ depending on where you are and the choices you make, per cost-of-living figures from Hertz. Housing will always be your biggest expense. According to the latest figures, the average cost of a one-bedroom apartment in an expensive part of Reykjavik would amount to $2,176 per month. In contrast, the same apartment in Akureyri would cost just $1,738 per month.

Food is also a significant expense, with the cost of outdoor dining being significant. A cheap meal from a fast food outlet will set you back $20, whereas dinner at a mid-range restaurant will average at $71. That’s why most Icelandic people prefer to shop and cook at home.

These are just examples of the costs workers can expect to contend with if they choose to live and work in Iceland. Despite the expectation that prices will continue to climb, it’s largely offset by Iceland’s generous wages and conscious approach to supporting the population to cope with the soaring cost of living.

Average Salary in Iceland vs. the Rest of the World

You can gain more perspective on Iceland’s salaries by comparing them to salaries worldwide. Here’s how they measure up to wages in developed, developing, and undeveloped countries.

Iceland vs. Developed Countries

Country Average Salary Comparison to Average Iceland Salary
United Kingdom 3000 euros (approx. $3116) 48%
United States $5677 – 23%
Norway 50,790 kroner (approx. $4700) – 2%
Germany 4300 euros (approx. $4467) 2%
Austria 3500 euros (approx. $3636) 27%

Iceland vs. Developing Countries

CountryAverage SalaryComparison to Average Iceland Salary
Romania4000 RON (approx. $835)454%
Russia73,709 Rubles (approx. $700)585%
Albania1500 Euros (approx. $1550)205%
Kazakhstan342,082 Tenge (approx. $645)607%
Ukraine18,000 hryvnia (approx. $500)820%

Iceland vs. Undeveloped Countries

CountryAverage SalaryComparison to Average Iceland Salary
Thailand97,500 Baht (approx. $2772)64%
Philippines18,423 PHP (approx. $875)413%
Vietnam8.5 million dong (approx. $360)1177%
Egypt13,244 EGP (approx. $263)1692%
Pakistan45,000 PKR (approx. $150)3050%

Iceland is a developed country with a high standard of living and a strong economy. A low unemployment rate, a strong union presence, and a focus on work-life balance characterize its work economy. The main sectors include fishing, tourism, and aluminum production. 

The country is a favorable outsourcing destination due to its highly skilled workforce, political stability, and strategic location. It is centrally located in Europe and has good time-zone compatibility with many Western regions. Iceland is also a leader in clean energy, which makes it an advantageous partner for several companies. 

What are the Most Common Outsourced Industries in Iceland?

Employers seeking to hire Islandic remote workers may seek to fill the following positions:

IT Services

Iceland boasts a vibrant IT sector focusing on fintech, gaming, and cleantech. Its strategic position between Europe and North America makes it ideal for data traffic and recovery. It is home to various tech startups representing various IT contingents.

Although the country’s salaries may not be as competitive as other countries, its specialized areas make it a leader in the industry.

Aluminum Smelting

Aluminum smelting is one of Iceland’s most essential, power-intensive industries. Three plants produce over 850,000 metric tons of aluminum annually. Companies outsourcing this service can benefit from Iceland’s cost savings and industry expertise. The country also offers quality standards and optimal logistics. 

Manufacturing

Iceland produces the most electrical power per capita worldwide due to its vast hydroelectric and geothermal resources. As a result, it is a manufacturing leader and an ideal location for outsourcing clean energy. 

Conclusion

Although Iceland’s average salary may not be the most competitive, the country offers specialized services that could give businesses an advantage. Its strategic location also makes it an outsourcing leader. Companies that seek out partnership opportunities can establish advantageous positions in their industries.