A job fair in Reykjavik last month drew 2,500 people. About half of Icelanders aged 18 to 24 are said to be considering leaving. (Arnaldur Halldorsson/Bloomberg News)

For Iceland, an exodus of workers

REYKJAVIK: Almost 1,200 years after the Viking chief Ingolfur Arnarson left Norway to found Reykjavik, the crisis engulfing Iceland is forcing his descendants home.

"There are no jobs here," Baldvin Kristjansson, an 18-year-old from western Iceland who once worked repairing containers, said at a European job fair here. "I'm going to move away and go to Norway."

Iceland, an Atlantic island of 320,000, is facing the biggest exodus in a century, a result of its worst financial crisis since gaining independence from Denmark in 1944.

Iceland's $7.5 billion annual economy may shrink about 10 percent next year, according to the International Monetary Fund, which is helping provide a $4.6 billion bailout package.

About half of Icelanders aged 18 to 24 are considering leaving the country, the Icelandic newspaper Morgunbladid said, citing a survey of 1,117 people taken Oct. 27 to 29.

"Tens of thousands" will depart, estimated Lars Christensen, chief analyst at Danske Bank, the biggest lender in Denmark.

Iceland's biggest wave of emigration was in the late 1800s and early 1900s. Then, 15,000 out of a total population of 70,000 left, joining a flow to North America from countries including Norway, Sweden and Ireland.

A hundred years later, Iceland's economy is struggling after the nation's banking system collapsed last month under the weight of its foreign debt.

Inflation surged to an 18-year high of 17.1 percent in November after a currency collapse that drove up prices. A protest against the government turned violent last week as the police used pepper spray to battle demonstrators in front of Reykjavik's main police station.

Unemployment is forecast to rise to 7 percent by the end of January from a three-year high of 1.9 percent in October, the Labor Directorate estimates.

"A lot of people are registering unemployed," said Valdimar Olafsson, who is an adviser in Reykjavik for Eures, a network of European public employment services. "It's very hectic, and Icelanders are asking for jobs, especially in Norway."

Norse settlers arrived in Iceland around 874 on sail-powered wooden longships. The country came under Norwegian control in 1262 and then under Danish dominion in 1380. It gained autonomy 90 years ago this month and became fully independent in 1944.

The Danes and Norwegians, along with Germans and Poles, returned to pluck Icelandic talent at a job fair on Nov. 21 and 22. It drew 2,500 people.

Neither Denmark nor Norway has been fully spared from the effects of the global crunch. Denmark's economy will shrink 0.5 percent next year, according to the Organization for Economic Cooperation and Development. Norwegian economic growth more than halved to 0.2 percent in the third quarter.

Both remain in much better shape than Iceland, though, and Norwegian and Danish companies are seeking skilled workers.

"Iceland is more or less in a state of coma," said Sigrun Thormar, who runs a consulting business for Icelanders moving eastward. "There will be an increase in the number of Icelanders seeking work in Denmark."

Danish unemployment is 1.6 percent. In Norway, the jobless rate rose to 1.8 percent last month from 1.7 percent the previous month. Norway's Labor and Welfare Administration expects unemployment to stay below 3 percent over the next two years.

Teknova, a research institution based in Kristiansand that is looking for scientists, and Aibel, a provider of products and services to the oil and gas industry based in Billingstad, are among Norwegian companies seeking Icelandic workers.

In total, Norway's employment service has 350 vacancies posted, said Ragnhild Synstad, a Eures adviser from Norway who attended the job fair.

"I have been absolutely swamped with employers that are interested," Synstad said. "The response was overwhelming. We heard some very sad stories about families who have lost everything."

Stefan Gudjonsson, 37, who was laid off from his job as an account manager at an information technology company, said he might have to leave his 6-year-old son behind for work elsewhere.

"I don't like the look of things right now and also worry about what has yet to happen," he said. "People are trying their best to be optimistic, but the prospects look anything but good."

Meera Bhatia reported from Oslo.

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