WB: Migration, economic inactivity and underutilization of talents are challenges for Albania

The Albanian economy faces real challenges closely related to human capital.

A periodic assessment by the World Bank, published under the heading "Poverty and Equality," focuses in a full paragraph on the potential that human capital has in the country and what can be done to positively impact the economy through its fair assessment.

The report implies better conditions to encourage more active participation of the most productive part of human capital, something that, in addition to developing the economy, also returns the investments in education made over the years.

“Albania possesses an untapped human capital potential that can drive growth and development. The country faces challenges such as migration, economic inactivity and under-utilization of existing talent pools. Improving the “utilization” of educated individuals, by improving labor market conditions to create better jobs, will not only bring immediate economic benefits through increased productivity, but will also maximize the return on the country’s investment in education.

“Promoting women’s economic participation is essential for Albania’s trajectory towards achieving high-income status. Closing the gender gap in employment could lead to a significant increase of 12 percent in GDP per capita in the long term. Unleashing women’s potential through education and labor market participation is thus essential for lifting the country out of poverty and towards prosperity,” the report says.

Poverty is expected to fall further

The World Bank report summarizes the progress of the poverty trajectory from year to year in the country. According to this report, between 2016 and 2019, strong economic growth led to a significant reduction in poverty levels.

“After an increase in 2020, poverty is estimated to have resumed its decline, driven by a strong post-pandemic recovery. Income-based poverty ($6.85 PPP per day) fell from 41.6 percent in 2016 to 32.2 percent in 2019, while GDP per capita grew by an average of 5 percent per year.

After an increase to 33.1 percent in 2020 due to the November 2019 earthquake and the COVID-19 pandemic, poverty is estimated to have fallen to 22.5 percent in 2023 thanks to strong GDP per capita growth, and is expected to fall further by 1.5 percentage points in 2024.

While inequality has declined, it remains high, with a Gini index of equivalized income reaching 36 points in 2018, the highest in the Western Balkans after Montenegro (36.9). In 2025, poverty is expected to fall by 1.1 percentage points to reach 19.8 percent,” the document states.

The same assesses that the Wellbeing Gap measure, which estimates the difference between people's income and a global standard of well-being of $25 per person per day, highlights the challenges of promoting inclusive growth.

“In 2018, Albania’s Welfare Gap was 3.9, indicating that incomes would need to increase on average almost 4 times to meet this standard of well-being. The employment rate was 68.6 percent on average in 2024, with male employment increasing by 2.0 percentage points, while female employment rates fell by 0.3 percentage points. Unemployment fell to 9.4 percent, but youth unemployment (15–29) remained high at 18.9 percent. The average wage increased by 9.8 percent in 2024, with growth across all economic sectors,” the report states./ Monitor