Municipalities in Albania and Kosovo, with the largest administration in the region

Albania undertook the territorial reform in 2015 with the main aim of reducing the administrative burden and improving public services.

Despite this fact, municipalities account for a large share of total public employment compared to the region.

A study by the Organization for Economic Cooperation and Development (OECD) showed that local government in Albania employs 30% of employees in the public sector.

This share is lower in Serbia, where local government employs 15% of public sector employees. This weight in Montenegro is 24%, in North Macedonia 16% and in Kosovo 33% with the highest weight of the local government in the total employment in the public sector.

Increasing efficiency in the use of available resources is a constant challenge for municipalities everywhere in the world, but also in developed countries.

In Albania, the expansion of the range of local public services to be performed by the municipalities in 2015 significantly increased the personnel and, therefore, also their personnel expenses.

At the end of 2022, the budget with own funds for expenses for municipal personnel reached a level of about 25 billion ALL, an increase of about 5% compared to the previous year and represented about 43% of expenditures with own funds for the same period.

This is the highest historical level recorded for personnel expenses with the municipalities' own funds, partially determined by the increase in the number of employees in the municipality by about 5.3% in annual terms at the end of 2022.

In average terms, for one employee in the municipality in 2022, about 56,868 ALL were spent per month, about 1% less compared to the previous year.

The average cost to hire fluctuates in an interval with the maximum average value of about 70,915 in the Rrogozhin municipality and the minimum average value of about 32,917 lek per month in the Memaliaj municipality.

About 72% of the municipalities (44/61 municipalities) are estimated to have an average cost to hire below the average value for the 61 municipalities.

Compared to the reference level used by the World Bank of less than 25 employees per 1,000 inhabitants, it turns out that 51 municipalities have a lower level than the reference.

In contrast, 8/61 municipalities (Dropull, Fushë-Arrëz, Memaliaj, Përmet, Këlcyre, Skrapar, Pukë, Tepelën municipalities) remain above this reference level, suggesting an overload of employees in relation to the municipality's population.

However, the expenses incurred by the municipalities account for 9% of the total expenses of the general government. The domestic CO-plan report shows that indicators of decentralization in the direction of spending in 2022 slowed down.

Covering current expenses (for personnel, operational and other expenses) continues to absorb resources in an inherent way (with own and conditional funds).

The investment component presents high volatility, depending on the contribution from contingent investment funds. Monitor