Third and final phase of staffing reductions in central administration
Reykjavík City Council today approved the mayor’s proposal for extensive cost-saving measures across City Hall offices and the central administration of specialized and core departments.
The City Council also capped full-time equivalent positions in Reykjavík City’s central operations at 7.5% of the City’s total full-time equivalents, down from 8.4% in June 2026. Under the plan, 50 employees across five departments and two offices will be laid off, though three will be offered other vacant positions. Overall, the cutbacks will reduce staffing by 73.8 full-time equivalent positions through staff turnover, temporary appointments, and a hiring freeze, among other factors. Employees who lose their jobs will have access to support from psychologists and job search assistance through a recruitment agency.
- Staffing in the City’s central administration will decrease by 74 full-time equivalent positions.
- A total of 50 employees will be laid off, with the remaining reductions achieved through staff turnover, temporary positions, and a hiring freeze.
- Efforts to improve efficiency and control spending across City operations will continue.
- From June through October, the total financial impact of staffing reductions is approximately ISK 2.3 billion.
- The focus remains on protecting frontline jobs and basic services for residents.
These steps are expected to generate approximately ISK 1.3 billion in recurring annual savings. The City Council’s efficiency working group tasked department directors and other managers with developing and implementing cost-saving measures under revised criteria.
Final phase of extensive staffing reductions
The proposal prioritizes legally mandated responsibilities and basic services. As a result, the reductions primarily affect central administration, internal services, and management positions, rather than jobs providing day-to-day services to city residents. The City will also focus on simplifying procedures, reducing administrative overhead, and capitalizing on opportunities created by digital transformation. This effort aims to strengthen the City’s financial footing, reduce administrative overhead, and direct funds as effectively as possible toward legally required services and activities that directly serve city residents.
These measures mark the final phase of staffing reductions across the City’s central administration, where full-time equivalent positions will be capped at 7.5% of the City’s total workforce going forward.
Even so, work to strengthen the City’s underlying operations will continue through ongoing spending controls and regular reviews of all initiatives undertaken. Stricter hiring rules will also remain in full effect. Next, the City Council’s efficiency working group will focus on asset sales and City procurement, while analyzing absence and sick leave rates among City employees to formulate recommendations.
Five departments and two offices affected
The measures affect the Department of Human Resources and Work Environments, the Department of Finance and Risk Management, the Department of Service and Innovation, the Department of Environment and Planning, and the Department of Culture and Sports, as well as the Office of the City Attorney and the Office of the City Council. They do not apply to the Department of Education and Youth or the Department of Welfare, where extensive organizational changes and cost-saving measures were already approved and carried out earlier this year.
Cost-saving measures totaling ISK 2.3 billion
Implemented in three phases since the new City Council majority took office in June, recent cost-saving measures and administrative changes in Section A – Core Operations of the Reykjavík Municipal Treasury will reduce staffing by a total of 130 full-time equivalent positions. In total, these actions will lower annual payroll costs by ISK 2.3 billion. These include cost-saving proposals for the Office of the Mayor and Chief Executive Officer approved by the City Executive Council on June 25, initiatives for the Department of Education and Youth and the Department of Welfare approved by the City Executive Council on Aug. 25, and the package approved by the City Council today, Oct. 27.
Mayor Hildur Björnsdóttir:
“With these steps, we complete the third and final phase of the extensive staffing reductions we have had to carry out across central administration in recent months. These were difficult but necessary decisions that we did not take lightly. Behind these numbers are people who have done vital work, and I want to thank them for their contributions to the City over the years. Reykjavík City faces an extremely serious financial situation. The City has run substantial deficits in recent years, and we must address this reality firmly and responsibly. We have focused our cost-saving measures primarily on management, internal services, and central administration to protect basic services for city residents. As elected representatives, we are responsible for bringing operations under control and lowering the City’s interest burden. Only then can we safeguard basic services and ensure necessary investments for the future.”
