This is a very rose colored glasses view of Iceland. Having lived there until very recently, it is not a tech utopia by any means. There are very few jobs in tech, and no matter what you do or for how long it's rare to break 1M isk a month (which is about 80,000 - 85,000USD depending on the incredibly volatile currency) due to hostile tax structures. You can make less money developing software than you can fishing, so there's not a lot of draw to stay in the tech industry.
Most of that geothermal energy? Yeah, it's sent to massive aluminum smelting plants. The entire government is also influenced heavily by the fishing industry, and there is a lot of resistance to change.
The article also talks a lot about per capita investment. Considering Iceland has 375,000 people, that's hardly the stat to lead with. ~250,000 of them live in the capital area.
Iceland is a wonderful place, with wonderful people, but the economy is collapsing and the warring 10 parties of government are effectively slap fighting each other instead of changing anything just so they can not be the Independence party. Inflation has been hovering around 8-10% a month for the last year. Iceland's real draw is its natural beauty, and the tourism it inspires. Unfortunately, what used to be a very inexpensive place to visit is now incredibly expensive to fly to, and also expensive to be in. People I know in the tourism industries have said they saw rapid growth post-covid, but rising costs have zeroed out or even made them less profitable than before covid.
It is a place I love, and a people I love, and I will continue to go back and visit yearly. It isn't going to be the next hot tech spot though.
FWIW I've worked in tech here in Iceland for 12 years and this isn't really my experience. The article is a little rose-tinted but it isn't as negative a bbarn makes things seem either. In particular salaries in tech can definitely be higher than they make out and this sector is healthy for the size of the countries population!
I did follow up with another sentence where I disagreed with the point that’s relevant to the article under discussion here. It’s seems pointless to run through all the tangential stuff the OP wanted to have a jaundiced rant about.
The inflation they're experiencing is not a sign of a collapsing economy. It's similar to other European countries right now. Also, 80k USD a year is a ton by European standards, so I'm not sure why you're using that as a point of comparison. Especially considering the employer pays significantly more (which goes to healthcare, pension, etc.) in practice. Iceland has some of the highest salaries in Western Europe.
Is a maritime shipping supposed to drive up prices or something? I thought it was the cheapest way to go, to the point of being cheaper than trucking.
The only exception I can see if for stuff that doesn’t store well, but controlled atmospheres have done a ton to make it possible to eat “local” apples in the middle of winter.
I’m in Canada and it seems to be a wash whether our citrus comes from Spain, North Africa or Florida.
Idk if it's considered a lot or not, but this source estimates transportation to Hawaii to increase the price of goods by a max of about 7.5%, while in all likelihood it's much less due to modern shipping.
Labour costs are the reason for the biggest chunk of Icelandic prices plus taxes.
Since this is HN I will add that I am ok with both of those. Wages for unskilled labour should be high enough to live on, and taxes pay for our social infrastructure.
We've been there last year. Truth be told, groccery shoppong was nowhere close to what it used to be ten years ago. Actually, groccery prices used to, in total, on par with France at the time and only slightly above Germany.
I do remember the time 3 (!) onions were as expensive as 1.5 kg in Germany. Overall, and I have no idea about rent or salaries, groccery prices were reasonable for 2022.
Food is not a huge expense though. I spend 150€ a month in Sweden. Even if it was twice as expensive in Iceland, it wouldn't be too bad. They have a very high disposable income. And things like heating and electricity are basically free.
Spending 1.6 euros (18,50 SEK) per meal (assuming 3 meals per day) including eating out etc is very low. That is far from the average in Sweden. And it is even more far from being what you spend if you wanna eat out a lot (which many high income tech people want). I'm not judging (I spend very low amounts on food myself) but you can't really say you are representative for the average tech worker in Sweden when it comes to food spending.
Icelander here as well, I've worked in Norway, the UK and Germany. An 80k salary here buys you the lifestyle of a 50k salary in Berlin, the only reason I moved back is kids and grandparents.
Was that rent driven? Because Berlon is, still, considered cheap. Not everywhere and a lotnofnlocal are getting priced out since at least the early 2010s, but still cheap compared to places like Munich or Frankfurt.
No, I can't say it's rent driven per se as there are other factors but housing issues have gotten progressively worse last 20 years or so, same problem as everywhere else except that in our case it's amplified by having to structure an economy around the peculiarities of having world's second smallest independent currency in our wallets. That said, there definitely exist worse housing markets in the world, this is no Munich.
Regarding the currency, that Iceland is expensive, is partly due to rules such as our pension funds not being allowed to invest but 20% of their fund outside the country, a rule designed to reduce the downward pressure on the local currency and create demand for it that would otherwise exist to a smaller degree as the long-term returns of local investments have been worse than the performance of the "foreign" portfolio. Mix such rules which create "artificial" demand, actual demand for the currency from tourism, indexed mortgages (a concept so unbelievable I've added a link at the bottom) driving up prices and you end up with a situation where economic problems are one of the few things that we don't have to import.
I’m moving to Sweden from the Bay Area and this seems very low - I spend that for myself and my wife probably over two days (including coffees etc)… Is this the genuine average? It’ll make me swallow lower salaries a lot easier!
Looking at my banking app for the last 6 months I spend between 6K to 10K Swedish crowns in supermarket food, work lunches and dinning. I live I Malmo. Stockholm dining will be more expensive. Moved here in 2011 from the US, love it. 6 weeks of paid vacation and work life balance: priceless. Welcome!
The average expenditure on food and staples of a Norwegian household is according to national statistics €235/month/person (not including dining out); based on the general cost difference between Norway and Sweden, this should translate into €210/month/person.
That's very likely. If you eat for €2k in Sweden you're not eating out at any time during the month. You can add at least another €2k to that if you want to go out to eat every workday lunch, which many high-income people do.
Speaking from personal experience, its mostly younger workers who eat yesterday's leftovers in the cafeteria.
yes, small population plus remote location for shipping and no natural resources (besides fish) means we're much lower priority for imports and scale of imports.
Why are tech salaries so low over there? I’m the US you will break $100-120k USD as a recent graduate even in parts of the South and the Midwest with lower cost of living.
1. Europe isn't a single tech market, it's dozens. You might get paid California wages in Switzerland, Midwest salaries in London, and less elsewhere.
2. It's also dozens of markets when selling products. As much as the EU tries, functionally there are still barriers to trade across the EU, let alone places like the UK. Stuff like language, culture, religious practices all impede easy scalability, not to mention differing laws.
3. The US is a continental-scale superstate mercifully isolated from most of the world's wars. Europe is not. It's that much harder to grow the amount of capital North America sees when the continent is split of more than often at war with itself.
Around half of what your employer pays goes to the state, health insurance, retirement insurance, social insurance, ... In the US I assume you need to save much more money in case you lose your job or can not work anymore due to health.
Also education is paid for by the state. In the USA I heard people pay off study debts for many years and are thus also forced to look for high paying jobs
Lack of companies who earn a lot or have a lot of cash / good business model. Currently open FAANG engineering positions are close to 0 (Still more than 600 positions in the US) and there are single digit "FAANG-like" companies here (hundreds in the US).
I don't think that Germany will ever catch up tbh. There is no incentive. Once you earn a little more, the progressive tax rate is too high and eats everthing away. Less people pursue engineering in the first place, because net wages are so compressed. Also just look at real estate.
Munich:
- Median house price: USD 1’534’933 for ~1500 sqft
- Median salary: USD 59k pre-tax.
The pension system will break in the next decades. Actually
it already is.. it is already heavily financed by other taxes.
This country has other perks like more vacation days, but making bank is definitely not one of them tho.
Many academics emigrate to Switzerland, USA, Netherland or Canada - me included.
By-and-;arge Germans don't own their own homes. The median age in Germany is about 45, but less than half (~49%) own their own homes. That compares to about 65% in both the UK and US, both younger than Germany.
No, it' not that low for mid level engineers. Here's some anecdotal data:
An SDE II offer from Amazon (Berlin) was 90k base + 15K sign-on bonus + some RSUs. An SDE I (new-grad ish) at Amazon makes 72K euros + RSUs (at Aachen).
Zalando offered 75k for an Applied Science role (Berlin) for someone with a masters degree and 3 years of web-dev experience before the masters.
Delivery Hero (Berlin) recently hired a friend of mine. His base pay was 84k euros. He had ~ 5 years of experience as a back-end dev.
Some one I know who defended their PhD in 2022 was offered 90k (base pay, no variable component) at Porsche.
I know about a recent offer from a translation comp
any based in Cologne that was close to 80k euros (base) for an SDE.
New grads still get offers in the 45-55k range, especially in smaller cities. A friend of mine just received a 57k offer from Deutsche Boerse (Frankfurt) for a non-SDE technical role. Honestly, it's not bad. 57k is approximately 2500 euros a month after taxes. Assuming that you pay 1000 euros for rent, you are still left with 1500 euros. Groceries shouldn't be more than 500-600 euros a month.
How is this relevant? Why does one need to live in Iceland (I have) to remind us that 80k USD a year is quite good in Europe, and that inflation isn't much worse than anywhere else?
It doesn't matter that they have not lived there, but they are not appropriately considering cost of living. Just because Iceland is in Europe and is a Nordic country does not mean it has the same economic situation as Sweden.
The social insurance (arbetsgivaravgift in Sweden IIRC) is paid by the employee.
Apart from that, many compare the salaries in Copenhagen and Malmö, which is obviously unfair with Copenhagen being the national capital, while Malmö was a run-down hole the last time I was there. I assume tech wages in Stockholm are more comparable.
The OP's claim was that a monthly salary was 1M ISK, and that 1M ISK was $80k. You are saying that a yearly salary is $80k. It seems pretty clear that those original numbers were wrong.
It’s interesting you say it’s expensive to fly to. We went last year from the US on our way to Poland because it was cheaper to fly to Iceland and then take a Wizz air than to fly through Frankfurt. And I’m talking a 50% savings. It’s cheaper for us to fly to Iceland from the east coast than to fly to Dallas.
Years ago it was shockingly cheap, but I still found local lodging and eating out expensive. My last trip was in 2009 for EVE Fanfest and a week-long stay in a hotel on Laugavegur ran me around $5k USD. Most other trips for same length of stay at that time were running me half that or less.
Iceland's expensive, but saying it's expensive because a hotel on Laugarvegur is expensive is like saying America's expensive because a hotel within walking distance of Times Square is expensive.
Add to that story that Iceland was in a deep economic slump after the financial meltdown when you arrived in 2009. The currency was cheap for anyone to buy.
You can imagine how the cost would be now after the economy has recovered since then, plus at least 10% inflation.
I agree that the article has rose-tinted glasses, but your post has (cynic coloured)-tinted glasses. I am replying here not to attack your post but to provide an alternate perspective.
> it's rare to break 1M isk a month (85 kUSD/year)
1M isk enough is very liveable here. If you disagree with this statement, I'm not surprised you left Iceland. Rightly so Icelandic society is undergoing a period of union-based striking in order to improve salaries for lower wage people (most recently teachers). If your motive in life is to maximise salary and pay minimal tax then, yes, Iceland isn't the best place to be.
> Most of that geothermal energy? Yeah, it's sent to massive aluminum smelting plants.
This is oddly snarky and vaguely frames this to be a negative when it is positive (especially for the economy). Roughly 85% of homes in Iceland are heated directly by geothermal energy. This drastically reduces residental electricity use. The economic situation in Iceland would be a lot worse if not for the smelters. Also, if the smelters were not in Iceland they would be elsewhere using electricity with a much higher carbon intensity. The article is wrong also, in that it praises Iceland for renewable energy when it is really just geographically lucky.
> the economy is collapsing
This is a pretty big statement that lacks any sort of support.
> the warring 10 parties of government are effectively slap fighting each other instead of changing anything just so they can not be the Independence party
As far as democracy goes, that sounds healthy to me. I agree that Icelandic politics is largely self-serving and is prone to "big fish in a small pond" mentality, but this is basically as good as democracy gets.
> Inflation has been hovering around 8-10% a month
No, annual inflation is 10%, so monthly inflation is around 0.8%. [1]
> Unfortunately, what used to be a very inexpensive place to visit is now incredibly expensive to fly to, and also expensive to be in
Yet tourism demand is quite good, which is creating a lot of jobs and bringing a lot of money into the country. It is now one of the 3 main pillars of the Icelandic economy (with electricity intensive industry and fishing). Odd that you'd look at this as a negative seeing as you have concerns about the economic health of Iceland.
> It isn't going to be the next hot tech spot though.
> The article is wrong also, in that it praises Iceland for renewable energy when it is really just geographically lucky.
Lots of places that are geographically lucky still fail to take advantage of that very same luck. Iceland could just as easily not have used geothermal energy to heat nearly all their homes, but they saw their advantage and capitalized on it. That should be commended, imho.
Iceland is barely a medium sized US city. Norway has fewer people than Massachusetts. It’s difficult to make any comparison at all between Scandinavian countries and the US in any lens given their lack of immigration and fairly uniform race and culture.
Doesn’t stop a lot of people here from trying, however.
Lack of immigration? Where did you get that from? Iceland had quite a high rate of immigration. In Sweden, 30% are either foreign born or have foreign born parents, with the largest immigrant group being from Asia.
Nearly the entirely population of Iceland came to the US in a single month. The scale of immigration here is very hard to compare with anything the EU sees.
The US has a population of ~330 million. Iceland has a population of ~390,000. Iceland is 102k km², but only about a quarter of that is habitable due to glaciers, mountains, and nature reserved. It's comparable in size to Vermont or Massachusetts.
17k people migrated to Iceland last year, or about 4.3% of the total population.
The United States 200k is about 0.06% of the population.
Have you been to Iceland? There's loads of non-Icelandic people living there. About 16.3% of the entire country's population[1], and in some areas it's close to 30%.[2]
The highest number of immigrants in the US are in CA, where it's ~23%,[3], and the country average is about 14%.[4] Although this number is no doubt higher in some cities like SF and LA. But as a country, Iceland has roughly the same or more immigrants than the US.
Absolute numbers tell me absolutely nothing. What matters is per capita. But if we're going to go by absolute numbers... Sweden had over 100-200k immigrants per year several years. That's over 1% of the population in just a year. Sweden has a higher rate of foreign born people than the US.
> The scale of immigration here is very hard to compare with anything the EU sees.
It's not. Lots of European countries have comparable or greater immigration rates than the US. And the EU as a whole is soaking up a huge number of Ukrainian refugees.
Correct me if I'm wrong, but nearly all the immigration to Iceland happened before 1000 CE.
That's why it's such a paradise for DNA research, and why they have websites so you can check how closely you're related to someone before marrying them -- everyone's related to everyone else, at a fairly close level.
That was true a few decades ago. Demand for tourism jobs has outstripped supply (especially in summer months) so a good number of people have come to Iceland (some temporarily, some permanently) to work. Poles are the largest group, making up about 5% of the population of Iceland: https://en.m.wikipedia.org/wiki/Poles_in_Iceland
Anecdotally, on a recent trip I briefly felt like there were no Icelanders in Iceland - I had a British masseuse, a Finnish horse tour guide, and a Namibian scuba guide.
Yeah Americans seem to have gotten the idea that nordic countries are completely homogenous for some reason. It's absurd how often I see them act like we can't compare our countries to the US because we apparently have no immigrants.
In the US there are many ideas about how things work in Sweden without closely considering facts. This is often politically motivated regardless of political affiliation.
They aren't, but Scandinavia may as well be. The only land border is an icy, barely-populated taiga controlled by an extremely authoritarian, violence-happy enemy of the West. My bet is crossing that border is _significantly_ harder than the US-Mexico border
In most cases you have Icelanders running the tourism business, but they won't be fronting the business necessarily. That is where imported labour comes in.
Talking about him has nothing to do with governments. If the government was functioning and so provided value to his citizens it wouldn't rely on a generous rich man to go around the country to install handicap ramps.
Go live there and see what you get for your money. A poor, overloaded health care system, food prices that the rest of the world drops their jaw at, and a nice clean downtown area in Reykjavík to show off.
> The article also talks a lot about per capita investment.
Comedian Ari Eldjarn has a really good joke a bout "per capita". It's an economist term, but in Iceland every five year old knows the phrase, because we, as a nation, are very frequently outliers when it comes to per capita, due to the small size of the population it doesn't take much in absolute terms, to skew the average very high or very low.
Also, as an Icelander who escaped to London almost a decade ago, I agree with everything bbarn has said. Most annoying to me was the fact that I could be a top expert in my field, and still only make about 50% above median income (assuming I can even find employment in Iceland doing that work). The bell curve in Iceland is very narrow, with almost no tail. In London I'm getting paid 4-5x what I got in Iceland, with significantly lower cost of living (and no inflation linked mortgage; if you want to be outraged, read about Icelandic mortgages)
I always tell people; Iceland is a great place to live, if you're happy being an average person, who drives an average car, lives in an average house, have an average family, with common hobbies and average ambition. If you dare dreaming bigger than that, you are considered a narcissistic capitalist and nobody likes you.
People are very supportive of start-ups, as long as they're not very successful. Once they start taking off and earning money, people change their tune. Then suddenly it's all "they couldn't possibly have been that successful without corruption", and "they need to pay more taxes"...
---
I remember reading comments on various social networks, where people cheered when my family's hotel business failed. A spate of cancelled bookings after WOW air went bust (people also cheered that), ended up causing cashflow problems and eventually the hotel was shuttered and the property was repossessed. In the end it was sold for more than outstanding debt and every creditor got paid, including the bank. - but oh my god people lost their collective minds about this. "Corrupt capitalist scum getting their comeuppance" was sort of the summary of people's opinions. My dad literally worked himself to death fixing up that hotel and trying to make it successful (he had a sudden heart attack on location in 2017). My mom was left with a ~10 million krona stake in the business along (~80k USD) with her siblings who had a similar stake, but for most of them this was a significant portion of their savings.
Just ordinary people trying to work hard and take a small risk to make something big happen, but people couldn't have that.
Most of that geothermal energy? Yeah, it's sent to massive aluminum smelting plants. The entire government is also influenced heavily by the fishing industry, and there is a lot of resistance to change.
The article also talks a lot about per capita investment. Considering Iceland has 375,000 people, that's hardly the stat to lead with. ~250,000 of them live in the capital area.
Iceland is a wonderful place, with wonderful people, but the economy is collapsing and the warring 10 parties of government are effectively slap fighting each other instead of changing anything just so they can not be the Independence party. Inflation has been hovering around 8-10% a month for the last year. Iceland's real draw is its natural beauty, and the tourism it inspires. Unfortunately, what used to be a very inexpensive place to visit is now incredibly expensive to fly to, and also expensive to be in. People I know in the tourism industries have said they saw rapid growth post-covid, but rising costs have zeroed out or even made them less profitable than before covid.
It is a place I love, and a people I love, and I will continue to go back and visit yearly. It isn't going to be the next hot tech spot though.