The lost wage race, in Albania it will reach 770 euros in 2024, in the region it has exceeded 1000 euros/month

In Albania, the average gross monthly salary for 2024, according to INSTAT, reached 77.5 thousand lek/month, or about 770 euros.

Compared to a year earlier, wages increased by 9.8% in nominal terms, while the real increase, indexed to inflation, was 7.6%.

Compared to 2014 (the earliest year for which INSTAT has information), when it was 40.5 thousand lek, the salary in nominal value has increased by 70%, while indexed to inflation, the increase is reduced to 42.4%.

Wage growth rates have been stronger in the last two years, mainly influenced by administration salaries, following the government policy that used the budget to change the salary structure in public administration, in a race to equalize salaries with the region.

Despite this movement, the region has moved much faster in wage growth, according to data that Monitor compiled based on relevant statistical institutes. With the exception of Kosovo, wages in Albania remain about 30% lower than in other countries in the region.

The highest average gross monthly salary is in Serbia, at 1,150 euros per month (135,403 Serbian dinars). In Bosnia and Herzegovina, the salary is almost 1,100 euros (2,140 BAM). In Montenegro, the salary is 1,083 euros. North Macedonia also pays its employees more than a thousand euros per month on average, specifically 62,000 Macedonian dinars, or 1,020 euros per month.

The euro wage in Albania is artificially inflated due to the depreciation of the euro, while the real purchasing power of income in lek has decreased due to the continuous increase in prices over the last three years (6.7% in 2022, 4.8% in 2023 and 2.2% in 2024). If converted at the 2022 exchange rate, to avoid inflation, the average wage in the economy in 2024 was 650 euros, again 40% lower than the regional average.

Separate data for the private and public sectors are only available for Albania and Serbia. They show the “distortion” of the market in Albania, with a difference of 30%, while in Serbia, both the state and the private have the “power” to pay equally.

In Serbia, the private sector pays an average of 1,100 euros per month, while in Albania 690 euros, for the year 2024.

In Albania, at the beginning of 2022, the administration was paid on average 20% more than the private sector, while in the last quarter of 2024, the difference in salaries reached 30%. Even a tax action in the last months of 2024 to combat the informality of private sector salaries failed to encourage enterprises to pay their employees more.

The last three years have shown that wage increases by administrative order are destined to be a failed practice. The best way to increase wages in the economy is to increase productivity.

This means that salaries increase in line with improving employee skills and efficiency, bringing real benefits in production and higher profits for the company, rather than being administratively increased without any improvement in performance./ Monitor