Currency restrictions lead to low-income jobs

Managers of companies worldwide are on the whole not very optimistic about growth in the world economy over the next twelve months. However, increased economic activity in Iceland, low inflation and falling unemployment – especially in certain sectors – are making Icelandic managers less pessimistic.

This is one of the findings of a PwC report on how senior management sees the future and the challenges to be faced. The study covers both the public and private sector and the findings are published in two reports presented at the annual World Economic Forum in Davos. Some 1,300 senior managers from all over the world, including Iceland, took part.

The report was presented this morning and was the subject of a panel discussion in Reykjavik. Among the participants were the Mayor of Reykjavik and senior representatives of SA-Business Iceland and PwC.

Important to create high-income jobs

While the currency restrictions currently in place in Iceland have to some extent protected Icelanders, in the long term they may be detrimental to the economy. Their existence promotes economic development in low-income sectors and creates potentially undesirable competition in industries involving high initial costs but generating low-income jobs, such as construction, shipbuilding and fertiliser factories.

External conditions are said to be right for lifting Iceland’s currency restrictions.

This morning's PwC meeting on how senior management sees the future. Photo. PwC

The participants at today’s events agreed on the importance of creating an environment which generates high-income jobs and focuses on knowledge, technology and design, in order to ensure that Iceland does not become a low-income country in the international context.