Flexibility
The birth parent is obligated to take leave the first two weeks after giving birth, but otherwise, the leave can be used as the parents decide within the first 24 months after birth. Parents can choose to use their rights all at once or divide it into shorter intervals. Furthermore, parents can use their individual rights simultaneously if they wish. Parents can also choose whether they use the leave full-time or if they take part-time leave with or without working on the side. Such flexibility has been in place for a quarter of a decade, since the law of 2000 was enacted. Thus, the parents have the right to use the leave as they like as long as this decision is made in an agreement with their employer. However, if an agreement is not reached, the parent always has the right to take uninterrupted leave.
Other work and family policies
The twofold aim of the paid parental leave law is in line with laws in Respect of Children (Law in respect of children no.76/2003), that emphasise the child’s right to know and receive care from both parents, as well as the goals of the resolution on family policy from 1997 (Parliamentary resolution on Icelandic family policy and actions to strengthen the family, no. 121/1997), which emphasises both parents being able to reconcile work and care. Furthermore, the Act on equal status and equal rights of the sexes (no. 150/2020) also emphasises the importance of reconciliation of work and family and states that employers shall do necessary arrangements to make it possible for their employees to reconcile their work duties and family responsibility. Keeping in mind this clear emphasis of the Icelandic legislator on ensuring legal right to reconciliation it is noteworthy that after the paid parental leave ends, children do not have legal right to public ECEC, as it is up to each municipality to provide care services as they see fit (Arnalds & Duvander, 2022).
In 2022 the Icelandic government introduced a law on bereavement leave, intended for parents in the workforce who experience the loss of a child under the age of 18. A parent who has been in continuous employment has an independent right to bereavement leave for up to six months from the day the child dies up to three months in case of a stillbirth occurring after 22 weeks of pregnancy, and up to two months in case of miscarriage occurring after 18 weeks of pregnancy (Bereavement leave law, no. 77/2022). The payments are the same as for paid parental leave, that is 80% of previous earnings up to a ceiling. There are no laws on entitlements of parents to leave to take care of their children when ill, but rights to be absent from work with pay is negotiated in collective agreements. The employer pays the salaries of the employee in accordance with the collective agreement. The social insurance system only pays home care benefits for parents of long-term ill and disabled children (Eydal & Rostgaard, 2013).
Leave reforms
Although the law from 2000 extended the leave from six to nine months and was generous in terms of individual quota rights, the total leave length of nine months was soon criticized for being too short. Parents were left to bridge the gap that existed between paid leave and ECEC and research showed that this gap was usually in practice bridged by mothers. This meant that the gender equality ambitions of parents’ equal rights to paid parental leave were possibly endangered by the longer, and often unpaid, leaves taken by mothers to bridge the gap (Arnalds & Duvander, 2023; Arnalds et al. 2013; 2021; Ingólfsdóttir & Gíslason, 2016). Therefore. it was not politically contested that there was a need for longer paid parental leave. In fact, a gradual extension of the leave was in the White Paper of a coalition government in 2007 (Forsætisráðuneytið, 2007) but this government was forced to step down after a strong wave of protests from the Icelandic public after the financial crisis hit in 2008, so no reforms on the parental leave were made.
The Icelandic parliament Alþingi has three times decided to lengthen the leave, although an extension has only been carried out twice. A new coalition government left of the centre came into power in early 2009 after the protests. The new government was forced to lower the ceiling on benefits radically, as part of the austerity measures, but in December 2012 it enacted an extension of the leave to 12 months (with a 5+5+2 division), just before the end of its’ term. In 2013 a new coalition government, right of the centre, was formed and they announced that the lengthening of the leave would have to be postponed due to the recovery after the financial crisis (Arnalds et al., 2013).
A similar bill to the one presented in 2012 was proposed by a left-right coalition government in November 2019. However, politicians were not ready to decide how to divide the 12-month period between parents. Two models were discussed: A 4-4-4 division, with a four-month quota for each parent and four months they could decide how to divide between them, and a 5-5-2 division, a five-month quota for each parent and a two-month sharable leave. The result was a middle-range solution, and a bill was passed granting parents who had a child from January 1st, 2020, ten months of paid parental leave, with a four-month quota for each parent and two months that parents could choose how to divide (a 4+4+2 division) (Arnalds et al., 2021).
The Icelandic parliament declared that by October 2020 the leave would be extended to 12 months, and a committee would use the time until then to reach an agreement on the division (Law on changes in the Act on maternity/paternity and parental leave, no. 149/2019). The committee delivered a proposal of 5+5+2. When the draft of the bill was presented in the consultation portal, it garnered much feedback from individuals, stakeholders, and experts. The social partners, including both unions and the organization of employers, supported the proposed 5+5+2 division. Those in favour of the bill emphasized that the non-transferable rights of the 2000 legislation had ensured that children received care from both parents, increased gender equality, lowered divorce rates, and led to better relationships between children and their fathers. Opponents argued for the freedom of choice for parents and that a longer leave for mothers was important for breastfeeding. There were also concerns that children of non-cohabiting parents would receive less parental care due to lower take-up rates by non-residential fathers. After further debates in Alþingi about how the 12 months should be divided, the final decision was that each parent would be entitled to six individual months, with the option to transfer six weeks to the other parent. Thus, each parent’s quota became 4.5 months. All MPs voted in favour of this proposal, and Alþingi accepted 12 months of paid parental leave by the end of 2020, with the changes implemented in January 2021. Furthermore, both unions and employers’ organizations supported the extension of paid parental leave to 12 months, indicating strong general support for the law (Arnalds et al., 2022).
In addition to lengthening the leave, changes that have been made to the law from 2000 concern the ceiling on benefits and the issue of non-transferability. The original law from 2000 ensured that all employees would receive 80% of their previous income, with no ceiling on leave benefits. However, in 2004, a relatively high ceiling was placed on the amount working parents received while on leave, since more fathers utilized their right to take leave than was initially expected. At the time, only 3% of fathers and 1% of mothers had salaried earnings above this ceiling, which meant that the vast majority continued to receive 80% of their salary while on leave (Eydal & Gíslason, 2008). However, during the period from December 2008 to December 2009, the ceiling on benefits was lowered severely due to the financial crisis that hit Iceland in 2008, as mentioned earlier. The lowering of the ceiling was more likely to affect fathers than mothers due to the gender pay gap and in 2010 45% of fathers had wages above the ceiling compared to 18% of mothers (Arnalds et al., 2019).
The restoration of the ceiling began in 2013 but despite a significant raise in both 2016 and 2019 the ceiling was still below its pre-crisis level. In fact, the maximum amount stayed the same in absolute terms from 2019 to 2023, while inflation was high, so the share of parents with wages above the cap rose as time went by. By 2023, 43% of fathers and 23% of mothers had salaried earnings above the cap, a similar percentage to what was the case during the financial crisis (Vinnumálastofnun, 2023). The Icelandic unions had long demanded that the economic compensation would be raised to the pre-2008 level as indeed politicians had promised. And as part of their agreement with the employers’ organizations and the state in March 2024 it was decided to gradually raise the ceiling so that in 2026 it will be 900 thousand ISK (5,881 Euros) which is almost the pre-2008 level (Stjórnarráð Íslands, 2024).
As for changes in the rule of non-transferability, initially there was only one exception to the rule: Namely that if either parent died before having made full use of their right, the remaining period was transferred to the other parent. Over time, further exemptions from the non-transferability rule have been implemented but only in cases where one parent is unable to care for their child due to e.g. illness, an accident, or incarceration, can the total leave be utilized by the other parent. In 2021 the list of exemptions was extended and it is now possible to transfer leave to one parent if a parent is unable to comply with its obligation to identify the child’s other, or under a restraining order, if a parent is neither entitled to parental leave in Iceland nor elsewhere, and if authorities or the courts prohibit the other parent from accessing the child. Despite these exemptions, the fundamental principle that a child has the right to receive care from both parents remains unchanged (Arnalds et al., 2021, 2022). In addition, as mentioned before, one parent families, e.g. women who have undergone artificial insemination and individuals who adopt a child alone, are entitled to the same amount of paid leave as two parent families.
Thus, during the past 25 years the total leave period in Iceland has been lengthened from six to 12 months and the non-transferable part for each parent has been extended from 3 to 4.5 months. Although the ceiling on benefits has changed over the years and some exemptions from the rule of non-transferability have been made, the law has not changed in character since 2000. It still provides equal quota rights to both parents with the aim of ensuring that children have access to both parents and enabling both parents to coordinate work and family life.
Leave use
Although the current Icelandic legislation does not use the terms “mother” and “father” it is important to distinguish between mothers’ and fathers’ leave use. Figure 2 presents the average number of days on paid parental leave used by parents in Iceland during the past twenty years. The figure presents numbers for all leave users, regardless of whether they received the earnings-related benefits or the fixed amount, but it is worth mentioning that around 90% of fathers and 85% of mothers receive the earnings-related benefits. Figure 2 shows that the vast majority of new fathers in Iceland have taken paid parental leave during the past 20 years. Fathers’ uptake dropped somewhat in the period from 2011 to 2015, when the ceiling on benefits was as its lowest due to the austerity measures after the 2008-crisis. There is also a considerable drop after 2019 most likely associated with the effects of the Covid pandemic and the fact that the ceiling on benefits was not raised, despite inflation. The figure also shows that the fathers that took leave, used between 86 and 101 days, on average, in the period from 2003 to 2019, when the father’s quota was three months (93 days). This means that their length of leave corresponded with their non-transferable rights. With the extension of the father’s quota to four months in 2020, fathers’ average number of days increased accordingly. In 2021 when the non-transferable period for each parent increased to 4.5 months, fathers used 131 days, on average. Mothers have however, on average, used their quota rights and shared/transferable days, but the numbers for 2022-2023 are still preliminary as parents have up to two years to use their entitlements.