Major overhaul of Reykjavík City administration with efficiency and simplification as a guiding principle

• These changes will result in 86 layoffs. The City will offer 32 of these employees new or restructured positions, while 54 will lose their jobs. 

• The restructuring reduces management and middle-management roles while protecting front-line services.  

• Annual savings should reach approximately 900 million króna.  

• The new structure continues to prioritize local services for residents in neighborhoods, schools, and recreational activities.    

• The City is simplifying its organizational structure. Fewer management and operational units, clearer responsibilities, and shorter communication lines. 

• The city will consolidate expertise in each service area into larger, specialized teams with dedicated professional support. 

• Children and families will access services in a single location. 
• Services at the centers will continue operating normally throughout the implementation period, but no later than the end of 2026.
   

These modifications introduce a new service and organizational structure for the welfare department and the Department of Education & Youth, streamlining administration, cutting management roles, and organizing services around professional disciplines. The overhaul integrates the functions and services of the centers, recreation centers, Keðjan, and the Virknihús Activity Center into a new structure based on residents' needs, professional specialization, and consistent citywide service delivery — replacing the former geographic neighborhood model.  

Implementation will finish by Jan. 1, 2027, establishing the following: 

Children and family services, alongside school and recreational services, located at Borgartún 12-14.
Social and housing services, located at Bíldshöfði 20.  

A system of governance aligned with residents' needs 

Center operations have contracted by 60% since the City transferred matters relating to disabled people to the specialized office within the Department of Welfare in early 2025. Those shifts, alongside the newly approved mayoral proposal, stem from analytical work involving conversations with center staff as part of a broader review of the City's administration begun in 2024. 

These discussions revealed that dividing services four ways across the Centers limited oversight, dispersed accountability, created inconsistent practices, and left professional teams understaffed with little flexibility to tackle complex challenges. The updated structure gives city authorities better oversight of these vital service areas, ensures families with children receive a higher, more consistent level of service, and creates opportunities to better evaluate service quality and effectiveness. This transformation will also make better use of public funds.  

900 million króna in annual savings 

Once fully implemented, the overhaul should generate approximately 900 million ISK in annual savings, driven by fewer positions, structural reorganization, and lower facility costs. 

These changes will result in 86 layoffs. The City will offer 32 of these employees new or restructured positions, while 54 will lose their jobs. This includes eliminating 22 positions when the City's contract with the national government for coordinated refugee reception expires at the end of the year. 

"These changes allow us to simplify the City's structure, strengthen professional services, and build a better foundation for serving residents. The goal is to ensure City resources are put to the best possible use for the people of Reykjavík. Simultaneously, we remain committed to keeping services close to residents — backed by stronger professional teams, clearer accountability, and more direct lines of communication. The City's financial situation requires cost savings, and unfortunately, some impact on staff is unavoidable. Our primary focus has been simplifying the organizational structure and cutting management positions within central administration," said Hildur Björnsdóttir, mayor.  

City Executive Council meeting minutes Aug. 25, 2026