Thursday, April 08, 2010

On the new wave of Icelandic emigrants

Marc Preel's AFP article doesn't say anything particularly surprising about one of the consequences of Iceland's spectacular economic collapse.

Anna Margret Bjoernsdottir never thought she would be forced to leave her once wealthy homeland, but after 18 months of economic upheaval she has decided to join the biggest emigration wave from Iceland in more than a century.

"I just don't see any future here. There isn't going to be any future in this country for the next 20 years, everything is going backwards," lamented the 46-year-old single mother, who plans to move to Norway in June.

The former real estate agent who lost her job when Iceland's housing market disintegrated two years ago said she feared she could soon be forced out of her large house in Mosfellsbaer, some 15 kilometres (nine miles) from Reykjavik.

"I don't want to sell it," she said, vowing to "fight to keep" the comfortable wooden dwelling she, her daughter Olavia, their cat Isolde Tinna and their dog Candit the Bandit have called home since 2004.

Bjoernsdottir is not alone in planning to leave Iceland's economic mess behind and seek a new future abroad. Most people in Reykjavik have someone in their surroundings who has already packed their bags and left.

Emigration has rapidly picked up speed since the Atlantic island nation's economy crumbled in late 2008, dragged down by the collapse of its major banks. Last year it marked the largest exodus from the country since 1887.

In 2009, more than 10,600 people left the country of fewer than 320,000 inhabitants, according to official statistics, with 4,835 more people moving away than immigrating.

Foreign workers, mainly Poles, who since the beginning of the decade had been drawn to Iceland's financial miracle, were the first to leave.

But Icelanders like Bjoernsdottir have not been far behind, most heading to the country's still prosperous Nordic neighbours, especially Norway.

"I don't think I can offer a good future to my daughter Olavia" in Iceland, Bjoernsdottir said.

Like many other Icelanders who have seen their worlds collapse since the financial turmoil began, Bjoernsdottir's predicament stems from the decision, on advice from her banker, to take up a loan in foreign currency.

Repayments on her loan, in yens and Swiss francs, became insurmountable after the Icelandic krona nose-dived following the banking sector implosion.

"My loans are twice as high as they were," she said, shaking her head in disgust. "The payments keep going higher and higher, so I have to leave, I'm forced to!"

Bjoernsdottir lost her job in real estate at the end of 2008 as the crisis hammered Iceland's economy. Since then she has picked up temporary teaching work, but that position also disappeared last September.

Analysts expect Iceland's beleaguered economy to stabilise in 2010, but gross domestic product shrank 6.5 percent last year.

As Statistics Iceland's March 2010 report notes, the Icelandic population shrunk by 1% between 1 January 2010 and 1 January 2009, this despite a rate of natural increase of 1%. The outlying areas of Iceland, away from the west and especially the capital of Reykjavik, saw the sharpest declines. Looking to the labour market, GDP per capita has traditionally been quite high because of the peculiar characteristics of Iceland's economy, where low productivity is compensated for by very high rates of labour force participation and long working hours. Although, as Statistics Iceland notes, labour force participation and working hours remain quite high by First World standards, and unemployment is still relatively low, by historical standards there's an abundance of labouyr. Given the continuing economic uncertainties, why not emigrate?

Where are these Icelandic emigrants going? Some authorities in Manitoba have flattered themselves by assuming that the substantial late 19th century New Iceland settlement in their province will attract a second wave of Icelandic immigrants. Much more likely is a movement to Europe, the reverse of the migration more than a millennium ago that led to Iceland's settlement in the first place. Icelanders have had the opportunity to move en masse for a long time thanks to the Nordic Passport Union, formally founded in 1952, joined by Iceland in 1965, and fused with the Schengen Area in 2001. Norway seems to be favoured, partly because of the traditionally close cultural and historical relationship between the two countries, partly because its economy is still quite strong, partly because the country's still close enough to enable a certain sort of commuting.

Other victims of Iceland's financial woes have ended up with one foot in and the other out of the country.

Svanbjoern Einarsson, a 44-year-old father of three, says he is trapped in the country due to an unsellable house that he does not want to abandon.

Instead, the engineer has chosen to work for six-week stretches in Norway's oil capital Stavanger on the western coast, with occasional one- or two-week breaks home with his family.

"It's very difficult. When I work I forget about it, but in the evening it's very tough," he said.

Long-term, however, he acknowledged his future may be in Norway, not Iceland.

It's important not to exaggerate things. Recent migration statistics do indicate that, although nearly five thousand people did leave the country, a bit under half of them were foreign citizens, recent immigrants. Iceland's immigrant population has exploded, migrants attracted by high living standards and the economy's demand for labour, growing from almost 2 700 people (1.9% of the population) in 1950 to 4 800 (1.9% of the population) in 1990, to, shooting up hugely over the 1990s, almost 7 300 (2.6% of the population) in 2000 and more than tripling to 23 400 people (7.4% of the population) in 2008, just before the crash. 1 500 of the foreigners who left Iceland in 2009 were Poles who--like others--were attracted to a prosperous economy desperately needing labourers and would likely have been among the first to leave, given the precedent of Polish migration to the United Kingdom and Ireland. The return of migrant workers to their home countries is a perfectly normal phenomenon.

That still leaves many Icelanders who did leave, and given the scope of Iceland's economic problems and the opportunities for Icelandic professionals, it's not unreasonable to imagine that unless things sharply improve, and soon, the country could face serious brain drain. Will Iceland make it? Small island societies, by virtue of their small size and their consequent dependence on larger external partners, have almost always produced relatively quite large numbers of emigrants. Iceland was such a society before; it might become such again.

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