Does Iceland have a minimum wage?

Iceland has no statutory national minimum wage. Minimum pay is set in collective agreements, and Act no. 55/1980 makes the terms they set minimum terms for all employees in the trade and area the agreement covers.

How are minimum wages set in Iceland?

Labour market organisations negotiate collective agreements by trade. Under Act no. 55/1980, article 1, contracts between an individual employee and employer on worse terms are void.

Does the EU minimum wage directive apply to Iceland?

Iceland is not an EU member state, and the directive is addressed to EU member states. EFTA lists it as under scrutiny for incorporation into the EEA Agreement.

🇮🇸Minimum Wage in Iceland: No Statutory Minimum

Iceland has no statutory national minimum wage. Minimum pay is set in collective agreements (kjarasamningar), and by law the terms they set are minimum terms for all employees in the trade and area the agreement covers.^1,2

Last checked: 12 October 2026

Statutory national minimum wage: None¹
Pay floors set by: Sector collective agreements (kjarasamningar)^1,2
Employees covered by a collective agreement: 90% (2024)³

How pay floors work instead

Article 1 of Act no. 55/1980 provides that wages and other terms agreed by the labour market organisations are minimum terms, regardless of gender, nationality or length of employment, for all employees in the trade and area the agreement covers. Contracts between an individual employee and employer on worse terms are void.²

According to the OECD, 90% of the employees with the right to bargain were covered by a collective agreement in 2024.³

The EU minimum wage directive

Iceland is not an EU member state; it is an EFTA country, and Directive (EU) 2022/2041 is addressed to EU member states (Article 19). EFTA’s EEA-Lex register lists the directive as an adopted EU legal act under scrutiny for incorporation into the EEA Agreement by Iceland, Liechtenstein and Norway.^4,5

See the full minimum wage ranking across Europe →

Frequently asked questions

Does Iceland have a minimum wage?: Iceland has no statutory national minimum wage. Minimum pay is set in collective agreements, and Act no. 55/1980 makes the terms they set minimum terms for all employees in the trade and area the agreement covers.
How are minimum wages set in Iceland?: Labour market organisations negotiate collective agreements by trade. Under Act no. 55/1980, article 1, contracts between an individual employee and employer on worse terms are void.
How many employees are covered by collective agreements in Iceland?: According to the OECD, 90% of the employees with the right to bargain were covered by a collective agreement in 2024.
Does the EU minimum wage directive apply to Iceland?: Iceland is not an EU member state, and the directive is addressed to EU member states. EFTA lists it as under scrutiny for incorporation into the EEA Agreement.

Sources

1.Minimum wages (earn_minw): reference metadata · Eurostat · 2026-07-31
2.Lög um starfskjör launafólks og skyldutryggingu lífeyrisréttinda nr. 55/1980 · Althingi · 2026-10-01
3.Collective bargaining coverage (OECD/AIAS ICTWSS database) · OECD · 2025-09-30
4.Directive (EU) 2022/2041 on adequate minimum wages in the European Union · European Parliament and Council of the EU (EUR-Lex) · 2022-10-19
5.EEA-Lex factsheet: Directive (EU) 2022/2041 · EFTA

Every statement on this page cites a numbered source and was read at that source on the date shown. This page gives information, not advice. Last checked: 12 October 2026.