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BIRN: Half of Albanians have a gross salary of less than 62 thousand lek!

Politiko 2025-06-13 19:31:41
BIRN: Half of Albanians have a gross salary of less than 62 thousand lek!
Illustrative photo

To date, the public debate has been supplied with a single indicator regarding citizens' income from wages, the average gross wage indicator. In the first quarter of this year, the average gross wage was 82 thousand lek, a figure that includes personal income tax, which is progressive, and social security for the part withheld by the employer.

Meet a "new" concept, not very well-known in the Albanian public debate: Median! The median is a statistical concept that marks the midpoint in a series of data ordered from the largest number to the smallest number. It is different from the average, which divides, in this case, the total income from wages by the number of employees.

The result is significantly different because the average has the ability to mask inequality, while the median speaks differently. Specifically, according to data published by the Institute of Statistics, the median of gross wages in the entire economy, which includes the public and private sectors, was 62 thousand lekë. The difference of 20 thousand lekë with the average wage suggests that income inequality is considerable. Thus, the median shows that, out of the 748 thousand salaried employees in the Republic of Albania, half or 374 thousand people have a salary lower than 62 thousand lekë.

The problem with the average as an indicator can be explained by the old anecdote that says: if there are two people, one of whom consumes two chickens and the other none, then the average taken alone suggests that they both ate one chicken.

The average also gives a false illusion when a small number of individuals earn disproportionately high incomes. For example, if a company's director earns 10,000 euros per month and there are 10 employees earning 500 euros per month, the average salary in this company is 1,800 euros, even though the employees only earn 500.

The main inequality in wage income in Albania is seen in the gap between the wages of the few employed in the public sector and the wages of the many employed in the private sector. According to INSTAT data, the 185 thousand public sector employees had an average gross salary of 98 thousand lek, while the 562 thousand people employed in the private sector had an average gross salary of 75 thousand lek.

However, these data should not be taken as absolute because declared income from wages in the private sector is affected to a significant extent by the widespread practice of tax evasion, while over the last decade, since the current government decided to abolish the simplified income tax for small businesses, a significant number of employees have registered as entrepreneurs, declare the official minimum wage and thus avoid both social security and progressive income tax.

Ultimately, the overall level of inequality is difficult to measure in Albania because the main factors fueling inequality appear to be untaxed and unmeasured income from corruption, crime or tax evasion./ BIRN

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