From poverty to dream holiday in Bali thanks to Airbnb

Industrial designer Matthildur S. Jóhannsdóttir’s friend was selling her flat in a Reykjavik block of flats four years ago, but was not happy with the price offered. Matthildur suggested the friend move and rent out the flat on Airbnb. The friend did this for three months, and the price increased considerably. 

Matthildur had been out of work herself for several years. She needed a job with flexible hours. She is in her 50s and could not find any work as an industrial designer. She thought things would only get harder, especially as she had not renewed her computer skills.

Started with one car

Matthildur’s friend was happy with her Airbnb experience, and Matthildur decided to do the same, to share and hire out her camper van on Airbnb. First she sorted out all the licenses needed, and she of course pays tax.

The sharing economy is considered to have had a limited impact on Iceland’ labour market. But the car hire has become Matthildur’s own little business and her workplace.

“I hired out only one car during the first year. The second year I hired out three different cars which I had converted into camper vans and this summer I was planning to hire out six. But I was in an accident and have spent time in hospital. So there will be only four or five cars for hire this summer,” she explains.

Changing attitudes

Katrín Ólafsdóttir, assistant professor at the Reykjavik University and the author of the Icelandic contribution to the report ‘Nordic Labour Markets and the Sharing Economy’, says the sharing economy together with the finance crash and the tourist industry boom has changed Icelanders’ attitudes and opportunities to take part in the sharing economy. Where they used to invest in housing and cars without sharing, they now happily share in order to support their incomes and improve their families’ economies. 

“Icelanders are used to having two jobs. Now they have their regular job plus rent out things on the side,” says Katrín Ólafsdóttir.

She believes the development has been useful, since it has prevented the Icelandic economy from overheating. Iceland would not have managed to handle the enormous tourist interest without Airbnb and different kinds of online car sharing schemes. It should be noted that Uber do not operate in Iceland.

“If we only had hotels, things would have developed very differently. We have been able to welcome more tourists than ever without problem, since the accommodation capacity has increased by 20 to 25 percent because of Airbnb,” says Katrín.

Saved the family economy

Matthildur S. Jóhannsdóttir thinks back to the financial crisis. She remembers abject poverty. She could not afford what most people would consider normal things. She could not buy new cosmetics, her trousers were tattered, her shoes useless. But the car hire business saved the family economy. They now have a good life and have been able to take their dream holiday – to Bali.

Matthildur enjoys a lot of economic freedom and flexible working hours. From November to March she does not hire out any cars, because she does not want tourists to experience any problems with the weather and road conditions. She maintains that the company should stay small scale, with personal service.

“I meet my guests when they arrive on the airport bus, and offer them coffee and Danish pastry at the bakery while going through Icelandic regulations,” she says.

Without the welfare system’s safety net

The leader of the Icelandic Confederation of Labour (ASÍ) Gylfi Arnbjörnsson believes the sharing economy often means a black labour market and social dumping. He points out that this is not organised work. He thinks people who are involved in this pay a large share of their income to the websites without being paid according to wage agreements covering the labour market. Gylfi thinks these people are not benefiting from the welfare system’s safety net since they pay no tax.

“We don’t like that,” he says.

The Icelandic country report points out that both the trade unions and the political parties – except for the Left-Green Movement and the Pirate Party – lack policies for the sharing economy. Gylfi Arnbjörnsson says the sharing economy is about the black labour market. ASÍ is fighting social dumping and the black labour market within tourism just like it does within other trades. That is ASÍ’s policy.

“We don’t criticise people who take part in this, we criticise the websites and companies that promote a black economy,” he says.

Cooperation with Airbnb

The sharing economy depends on participants organising their own business and makes it possible for the economy to develop on its own terms. The Minister of Finance and Chairman of The Reform Party Benedikt Jóhannesson agrees that Iceland might not have managed to handle the tourism boom without Airbnb. But he is convinced that many of those who are now hiring out housing via Airbnb are paying their taxes, despite the fact that there are those who do not.

His party’s policy is that those who take part in the sharing economy should pay tax. Benedikt points out that the Ministry of Finance recently met Airbnb’s representatives in Washington to discuss a cooperation on taxes. The ministry delegation was told that Airbnb is working with tax authorities in membership countries, and collect taxes on their behalf.

“It takes time to organise tax cooperation, but we have now established contact with Airbnb. It’s a start,” says Benedikt. He adds that EFTA has protested against the Icelandic taxi drivers’ monopoly and told the government to react. This could make it possible for Uber to set up shop in Iceland.