Iceland Initiates Major Review of Migration Rules Amidst Rapid Population Growth

Government Report Highlights Demographic Shifts

Reykjavík, Iceland – Iceland has embarked on a significant overhaul of its migration policies, prompted by an unprecedented rate of population growth. A new report, published on November 20, 2025, by Minister of Justice Þorbjörg Sigríður Gunnlaugsdóttir, calls for extensive reforms to the country's residence permit system. The review aims to address various challenges arising from the demographic shift, including inconsistencies with other Nordic countries and vulnerabilities among third-country nationals.

The working group responsible for the report, established in April 2025, examined legislative gaps, administrative practices, and the changing composition of Iceland's migrant population. Their recommendations were presented to the Minister by July 1, 2025.

Sharp Increase in Foreign Nationals

Between 2017 and 2025, Iceland's population grew by 57,000 people, marking a 17% rise. This growth rate is more than thirteen times the European average, with foreign nationals accounting for a substantial 69% of the increase. As of January 1, 2024, immigrants constituted 18.2% of Iceland's total population, totaling 69,691 individuals, an increase from 16.7% in 2023. The total population at the start of 2024 was 383,726.

The number of non-EEA residents has seen a nearly fivefold increase since 2017, with notable influxes from countries such as Ukraine, Venezuela, and the United Kingdom. The largest immigrant group continues to be from Poland, representing 32.1% of foreign residents, followed by Ukrainians (5.3%) and Lithuanians (5.1%).

Proposed Reforms and Challenges

The report outlines 25 proposed reforms designed to modernize the migration system. Key recommendations include:

• Consolidating residence and work permit processing at the Directorate of Immigration.
• Tightening rules on family reunification.
• Improving oversight of labor-market access.
• Aligning permanent-residency requirements with Nordic norms.

Concerns highlighted in the report include economic vulnerability, with third-country nationals aged 25–54 earning on average 22% less than Icelanders in 2024. Employment rates are particularly low among women from West Asian and North African countries. The rapid increase in asylum applications has also placed a significant strain on state resources, costing approximately ISK 20 billion in 2023 and impacting housing and services.

Context of Recent Policy Changes

This review follows earlier governmental actions to address immigration. In October 2024, Iceland introduced its first comprehensive immigration policy for 2025-2038, aiming to foster an inclusive, multicultural society. Additionally, amendments to the Foreign Nationals Act came into force in July 2024, modifying residence permit durations and asylum procedures. In February 2024, the government agreed on a four-pillar approach to enhance coordination in immigration matters.