Government emphases

The Government's well-being priorities

Towards the end of 2019, the government decided that six well-being priorities should be used to guide policy making and goal setting in each year of its five-year Fiscal Strategy, as provided for in the Public Finance Act, No. 123/2015.

These priorities are:

• Mental health
• Housing security
• Active study and work
• Carbon-neutral future
• Flourishing innovation
• Better communication with the public

The well-being priorities are forward-looking in important areas which reflect the government's strategy. The priorities are intended to form the basis for discussion of the ministries' 35 policy areas in the Medium-term Fiscal Strategy. The priorities of mental health, housing security, and active study and work are part of many policy areas while those that deal with a carbon-neutral future, flourishing innovation, and better communication with the public concern all functions of the ministries. 

Mental health

Good mental health is fundamental to well-being. There is growing concern about mental health trends, particularly among younger people. Reinforcing mental health services has been a priority for the government. Since 2019, budget appropriations to the issue have been significantly increased in accordance with the mental health policy. In addition, part of the provisional funding allocated during the pandemic for projects to support mental health and prevention was made permanent. It is important to further strengthen preventive work, for instance, against all forms of violence and support leisure activities, sports, arts and culture, as well as other factors influencing the work-life balance.

Housing security

Adequate housing is among the basic needs of each individual and housing costs are usually the largest item of household expenditure. In a large sample survey of the general public on well-being priorities, housing security ranked second only to health as characteristic of good societies. A substantial group lives with significantly burdensome housing costs, and more people are renting their homes than would like to.

The government has responded to housing problems in consultation with the umbrella organisations of the social partners, including by increasing the supply of social housing and amending the Housing Act to offer participation loans for first-time buyers. At the end of 2023, the Icelandic parliament Althingi approved a Parliamentary Resolution on a housing strategy for 2024-2038, together with a five-year action plan for 2024-2028. The housing strategy is co-ordinated with policies and plans in other areas of the Ministry of Infrastructure (like infrastructure issues and regional policy). The co-ordination of policies is founded on a shared future vision and main strategic objectives, envisioning growth in housing that accords with population growth and is based on long-term planning. It is important to follow-up on these priorities diligently and create a reliable housing market where people can enjoy predictability and long-term security in housing matters, whether as renters or owner-occupiers.

Active study and work

Education is important for both the competitiveness of nations and the quality of life of individuals. Education affects life expectancy, health, income, and participation in society. According to statistics, the dropout rate from secondary schools has decreased in recent years but is still high compared to those countries mainly used for comparison. It is important to further reduce the dropout rate because it can affect individuals’ future possibilities in the labour market. At the same time, the government's strategy needs to offer support to young people who are not active in the labour market, in school or vocational training, and are at risk of social isolation.

It is important to emphasise gender and equality perspectives when planning educational strategy and at all school levels. Gender differences, for instance, present a major challenge in vocational training, as some professions are almost entirely female-dominated while others are male-dominated. The ministries have supported measures to promote a more equal gender ratio in the certified trades, increase the interest of young people, especially girls, in learning a trade, and increase the number of youngsters who choose vocational and technical education after compulsory school. The government also emphasises the promotion of equality and sex education and violence prevention in schools, as well as prioritising support for continuing education and vocational rehabilitation. Emphasis is placed on providing both employees in the labour market, older people and those with reduced working capacity with opportunities for study and employment. In so doing, the government wants to support people in preparing for changes in the labour market, including the fourth industrial revolution.

Carbon-neutral future

Iceland has set itself the target of a 55% reduction in net greenhouse gas emissions (compared to 1990) by 2030 and a statutory target of carbon neutrality no later than 2040. Central in this plan is the government's emphasis on completing energy transition in the next few years, focusing on air, land and maritime transportation. The target is to have the ratio of renewable energy in transport at least 40% by 2030. The government has also set a target of a fossil fuel-free Iceland by 2050, with sustainable energy playing a key role. Actions are needed if these goals are to be achieved.

Addressing environmental and climate challenges has been a priority for the government. Most of the environmental well-being indicators show a positive trend reflecting the increased focus on environmental protection and sustainable development in recent years. The area of protected nature conservation areas tripled between 2006 and 2020. The amount of household solid waste decreased somewhat in 2018-2020, and the recycling ratio of household solid waste improved between 2019 and 2020. Total emissions of soot and particulate matter have decreased significantly since 2010, although a slight negative trend was observed between 2020 and 2021. The percentage of renewable energy in total consumption has also continued to increase. Although total industrial emissions of greenhouse gases changed little between 2020 and 2021, when compared to 2018, emissions have decreased somewhat.

Flourishing innovation

Innovation is the key to a strong and diversified economy. In April 2023, a new Act on the Science and Innovation Council entered into force, replacing the Act on the Science and Technology Policy Council of 2003. The objective of the new Act is to strengthen long-term strategic planning in science and innovation by taking a holistic approach to the issue, defining the roles of the main actors more clearly and applying extensive independent data analysis, along with follow-up and increased co-operation and co-ordination between ministries. A long-term strategy needs to be robust and ambitious, and it is crucial that it coincide with the action plans of different ministries and the Medium-term Fiscal Strategy.

The Ministry of Higher Education, Science and Innovation was created at the beginning of 2022. The new ministry encourages increasing expertise and focuses on issues in science, technological development and innovation. Its establishment provides an opportunity to work on comprehensive analyses and gain better oversight of the support system for science and innovation in Iceland. In recent years, funding to universities, competition funds and allocations for the reimbursement of R&D costs of private sector companies have increased greatly. The government also emphasises strengthening study programmes and increasing student numbers in science, technology, and health sciences, as well as increasing the number of males in higher education. Work is also being done to further develop connections between the university and the research community to promote innovation, the stability of the economy and the sustainability of export industries.

Better communication with the public

The objective of the current government's first term was to build trust in society and strengthen infrastructure, as well as ensuring political, social and economic stability.

One of the government's main reform projects relates to this focus on well-being. Digitalisation has already brought major benefits through new communication channels and contributed to improved government services for all citizens, reduced paper consumption and increased efficiency. In recent years, Iceland has improved its position in international comparisons of digital services to the public.

The Icelandic government participates in OECD comparative studies that measure people's trust in public institutions. According to recent results, trust in public institutions in Iceland is above the OECD average in all cases except when it comes to the judicial system. The OECD survey points out that, in general, the government could do more to respond to suggestions from citizens. For instance, only about 20% of respondents in Iceland believe that they can influence the government's decisions, which is below the OECD average. Around one-third of respondents in Iceland believe that public services are improved when complaints are made about them. That proportion is also below the OECD average. The OECD survey on the above-mentioned factors, conducted in autumn 2023, will be published in June 2024.

In response to the results of OECD surveys and as follow-up on proposals of the Prime Minister's working group on strengthening trust in politics and public administration from 2018, efforts are underway to strengthen democratic consultation with the public. Further proposals for actions will be formulated.