Nordic Parental Leave Policy: The case of Iceland

Use-it or loose-it leave scheme for fathers was introduced in 2000 and has shaped parenting and policy ever since.

Summary: In 2000, Iceland was the first country to provide both parents with an equal, three-month quota of parental leave. This was supplemented by an additional three months that could be shared by the parents but were mainly taken by the mother. This policy led to a marked increase in men taking parental leave in the country, and set the path for policymaking in the area even up until today.

Use-it or lose-it-policy introduced in 2000 for fathers

In the 1990s, Iceland shared the goals of the Nordic welfare model, but historically had smaller welfare expenditure as well as fewer public services and benefits for families than elsewhere in the Nordics. Paid parental leave was shorter (a period of six months' leave was introduced in 1991, up from three months introduced in 1981), and it was mainly used by mothers. There were huge disparities depending on which type of employer parents worked for, particularly to do with whether it was the public or private sector, and pay during leave was low. Iceland eventually earmarked a two-week leave period for men in 1998 (see Eydal and Gíslason, 2008 for more on this).

The parental leave law introduced in 2000 (Lög um fæðingar- og foreldra orlof nr. 95/2000) saw an equal quota of three months for each parent and an additional three months which could be taken by either parent. It was called the 3+3+3 model amounting to nine months in total. Importantly, the purpose of the new law was to:

  1. ensure a child´s access to both parents; and,
  2. enable parents to co-ordinate family life and work outside the home.

The first two weeks of leave were earmarked for the mother, but, unlike many other parental leave systems at the time, men had to take their three months or it would be lost. It could not be transferred to the other parent except in exceptional cases, e.g., if one parent had died. Certain exceptions have been added since, such as when the courts restrict access to the child, but largely the principle of equal leave between the parents remains.

Changes to the law in 2021 have followed similar principles to the 2000 law. After much wrangling over what was the best model regarding the division of leave between the parents, it was extended to 12 months where both parents have an equal quota of six months, but one and a half months can be transferred between them. Thus, each parent has 4.5 months of use-or-loose quota.

What are the benefits of a use-it or lose-it policy?

If parents are left to choose which of them will take parental leave, it typically means that the more highly paid parent (usually the father) remains at work throughout or, if there is a choice, transfers their portion of leave to the less highly paid parent (usually the mother). This perpetuates existing skewed labour market experiences for both genders. Women’s absence from the labour market, due to taking longer parental leave when their children are born, puts them at a disadvantage to men. Conversely, men have less opportunity to spend time with their children, which can have ramifications well beyond babyhood. While we refer to ’man’ and ’woman’ in many instances here, it should be noted that, in 2006, the law became gender-neutral referring simply to ’each parent’.

The child’s right to know and receive care from both parents is set out in the law in Respect of Children (Barnalög nr. 76/2003) and the Convention of the Rights of the Child (of which all the Nordic countries are signatories). We have, together with I.V. Gíslason, conducted surveys four times since 2000 to track the behaviour of parents over time in relation to cohorts of children born in 1997, 2003, 2009 and 2014 asking if the twofold aim of the law from 2000 has been achieved. A population study was carried out by sending surveys to all parents that had their first child during one of these years. The parents were contacted when the child had reached the age of three and were asked to look back on the first three years of their children’s lives. We asked all sorts of questions, including about the parents’ labour market positions one year before birth and up until the child was three years old, who cared for the child at home and how day care was organised until the age of three.

Our studies show clearly that parents divide the care of their young children more equally after the law came into effect and fathers take an active part in care during the first three years. There has been a huge increase in the sharing of care during a child’s first three years since the law came into force. Other important research by Olafsson and Steingrimsdottir has also shown that parents who had a child shortly after the parental leave law came into effect in 2000 were less likely to divorce than those who had a child in the months leading up to the parental leave reform (2020). It is more complex to gauge the impact of the law on making it easier for men and women to combine paid work and family life as there are very many contributory factors. However, our long-term research shows that the gap in mothers’ and fathers’ labour market participation and working hours has narrowed since the introduction of the law - although this is also arguably influenced by societal changes in general (see Arnalds, Eydal and Gíslason, 2022).

Average days used by mothers and fathers over time

Political debate on the policy

Somewhat surprisingly, the 2000 law was introduced by a right-of-centre coalition government between the Centre Party (Framsóknarflokkur) and the Independence Party (Sjálfstæðisflokkur). The bill was supported by both unions and employers, and received broad political and public support. From around 2012, there was agreement that changes should be made to the law, not least because formal childcare (nursery) usually only started at 12 months of age and the 3+3+3 model only covered a nine-month period creating a gap which was often filled by the mother or unsettled childcare arrangements. The bill presented in 2020 proposed a 5+5+2 division by a government with the same parties as in 2000, as well as a third party, the Left-Green Movement (Vinstri hreyfingin grænt framboð). This time there was political disagreement about how to divide the 12-month leave. Arguments against the principle of equal division between parents included that it was the parents’ right to decide how they wanted to divide the leave period and issues regarding breastfeeding, children’s attachment to their parents and equal rights of all children to be cared for by parents were brought up. Finally, the bill proposed a 6+6 division but with the possibility of transferring 1.5 months between parents and all MPs voted in favour of the proposal.

Fathers do use their quota, but the amount of pay is decisive

Fathers want to and do use their quota, and mothers generally use their quota as well as the joint period. The figures are clear in that the number of days taken by fathers went up quickly and steadily after the introduction of the 2000 law and have remained fairly consistent since. One of the reasons that the 2000 law was successful was due to the amount of parental leave pay it allowed. Every working parent would receive 80% of their usual salary, the well or badly paid alike, and those who were not in employment would receive a flat rate. Every employer in Iceland pays an insurance levy that finances, for example, unemployment benefits. It was decided that this levy would also finance the paid parental leave scheme, and a birth leave fund was established.

However, there was a larger take-up of the new parental leave than expected, so, in 2004, a fairly high ceiling was introduced (in its first year, 2.3% of fathers and 0.3% of mothers had earnings above the cap of IKR 480,000 at that time, according to Eydal and Gíslason, 2008). This generous ceiling had to be reduced several times due to financial constraints, and due to the 2008 financial crisis which hit Iceland particularly hard. When the ceiling was at its lowest in 2013, there were 43% of fathers and 18% of mothers with salaries above the ceiling. This reduction has been shown to have a knock-on effect and the number of fathers taking leave dropped by 10% and the average number of days taken by fathers dropped from 101 to 86. This clearly showed that, if the ceiling is too low, it has an effect on fathers' take-up, and that their take-up remains more vulnerable than that of mothers (See the Directorate of Labour’s report for 2022, in Icelandic). Thus, to enable take up from both parents, it is important to restore the ceiling to pre-crisis levels.

There is still work to do

Iceland is rightly well known for having high levels of female participation in politics, education, and the labour market. Iceland is only surpassed by Sweden with respect to the number of days men take for parental leave. But the labour market remains highly segregated by gender in Iceland. In 2020, for example, the unadjusted gender pay gap was 12.6% (the EU’s in 2019 was 14.1%). Men tend to work longer hours (40.9 hours per week compared to women’s 34.5 in 2020), and more men than women are active on the job market (87.4% compared to 73.4% in 2020) (These figures can be found in the Men in Care report by K. Stefánsson from 2021).

It is too early to judge the effects of the recent changes to the law, but it can be hoped that the principles behind Icelandic parental leave policies since 2000 will continue to have an equalising effect, as well as ensuring that children continue to receive care from both parents.

This article is based on policy analysis and data collected as part of the project Childcare and labour market participation of parents of children under the age of 3 with Guðný Björk Eydal, Ingólfur V. Gíslason and Ásdís A. Arnalds, funded by the Icelandic Research Fund (RANNIS), the Icelandic Equality Fund, and the University of Iceland Research Fund.

Putting a spotlight on early years care can help illuminate wider issues in society.

This article is published in response to readers' interest in gender, equality and policy differences across the Nordic countries.

Further reading:

  • Á.A. Arnalds, ‘Policies and parenthood: The impact of the Icelandic paid parental leave law on work and childcare’. PhD thesis. (Reykjavík: University of Iceland, 2020).
  • Á.A. Arnalds, G.B.Eydal and I.V. Gislason, ’Paid Parental Leave in Iceland: Increasing Gender Equality at Home and on the Labour Market’ in Successful Public Policy in the Nordic Countries, eds., C. de la Porte, G.B.Eydal, Jaakko Kauko, Daniel Nohrstedt, Paul 't Hart, Bent Sofus Tranøy (Oxford University Press; 2022) pp. 370-387.
  • Á.A. Arnalds, G.B. Eydal and I.V. Gíslason. ‘Equal rights to paid parental leave and caring fathers—the case of Iceland’. Stjórnmál & stjórnsýsla, 9, 2 (2013) pp. 323–344.
  • A. Olafsson, A. and H. Steingrimsdottir, ‘How Does Daddy at Home Affect Marital Stability?The Economic Journal (2020) 130, 629.
  • G.B. Eydal and I.V. Gíslason, I.V. Equal Rights to Earn and Care. Parental Leave in Iceland. Félagsvísindastofnun (2008).
  • K. Stefansson, ‘Men in Care: Workplace Support for Caring Masculinities. Country report: Iceland’. Report produced as part of three-year project co-funded by the European Commission (2021).
  • Vinnumálastofnun [Directorate of Labour]. Ársskýrsla fæðingarorlofssjóðs 2022 [Annual report of the birth leave fund for 2022].