Starfsstyrkja

Starfsstyrkja is an Icelandic term for employment subsidies, a form of wage subsidy provided by public authorities to employers to hire workers. The concept encompasses programs that subsidize a portion of an employee’s wages, and in some variants subsidies for training or internships linked to employment. As an instrument of active labor market policy, starfstyrkja aims to improve job prospects for groups with barriers to employment and to enhance workforce skills through on-the-job training.

Typical programmes require an employer to apply to a public agency and commit to maintaining the position for a minimum period. The subsidy commonly covers a percentage of the wage for a defined duration, with annual or total caps. Eligibility is often targeted at young people, the long-term unemployed, people with disabilities, immigrants, or other disadvantaged groups, although rules vary. Some schemes also fund training or mentoring as part of the subsidy.

Administration depends on the jurisdiction but in Icelandic policy it is usually handled by the public employment service or related government bodies. Applicants must comply with reporting and wage-level requirements, and subsidies may be conditioned on meeting employment or training milestones.

Impact evaluations of employment subsidies show mixed results. When well targeted and properly designed, starfstyrkja can increase hiring and help underrepresented groups, but adverse effects can include subsidized positions that would have existed anyway or administrative burdens that offset benefits.

See also: wage subsidy, active labor market policy, employment incentive programs.