Informality, the saga of sensational shares being silenced

Since coming to power in 2013, the socialists count dozens of actions against the informal economy. In more than ten years, the battles against informality have started with a bang but ended in silence. The latter targets the labor market.

Troubled by pensioners' dissatisfaction on the eve of an election year, the head of government announced the next action in the labor market. According to him, the pension fund will benefit from the real declaration of salaries.

"This is the great robbery. This is the great ease with which employers and employees deal with this issue today, and here we will intervene very strongly", declared Prime Minister Edi Rama during a meeting with pensioners.

Rama specifically addressed the warnings to businesses that hide salaries in two sectors: construction and tourism.  

"I am asking all companies to declare real salaries and not to play with fire in this matter. Now this is a game with fire," the Prime Minister emphasized in another informative meeting with pensioners.

Informality action after action
The last action in the labor market was made only two years ago. After the salary publication scandal in Albania at the end of 2021, the government was forced to set up the Special Anti-Informality Unit for employment income.

The unit aimed to increase the self-declaration of real wages through the realization of analyzes and the crossing of information, as well as based on risk criteria.

The conclusion?! The results of the unit against informality in wages were discussed only once. A few months after the action came to life, the prime minister appeared satisfied with the results.

"...we have over 25% of employees in the Republic of Albania who have crossed from the minimum wage level to a higher level, which means that they did not actually receive the declared minimum wage, but received more, all said Rama.

Two years later, the Ministry of Finance also says that the controls at that time gave results in the income from employment and services.

"There has been a decrease in minimum wage job positions, as well as a significant increase in those positions that have declared an increase in wages," the Ministry of Finance claims for Faktoje.al.

According to the responsible institutions, the social and health contributions have also increased as follows:

23% fewer jobs with minimum wage,
26% more jobs that have declared an increase in wages,
Over 7% increase in Social and Health Contributions
However, the government says it has a concrete plan to fight informality in the future. The key measures are divided into three main pillars: Good Tax Administration, Fiscalization and cooperation with international and local institutions.  

'Informality is not fought with actions'
The next action in the labor market that was sensationally announced a month ago calls into question the role of the Anti-informality Unit created in 2022.

"Repeated actions do not bring positive long-term effects." - says Artur Papajani, advisor in fiscal matters.

According to him, the fruits of this battle require a different approach.

"Only a National Anti-Informality Strategy is an effective undertaking. This has been missing and continues to be missing!", argues Papajani.

On the other hand, Professor Selami Xhepa estimates that informality should be seen as a problem beyond the labor market.

"The biggest fiscal evasion is in the balance sheets of companies. It is about transactions in large values ​​in the business sector more than what we can say about informality in the labor market", argues Xhepa.

"The fact that we have a higher level of taxes than the region but a much lower level of income from these taxes is a testimony to the level of fixed evasion in the true declaration of income and payment of profit tax.", he concludes. he.

'Evasion – the main form of informality'
The latest survey by the Investment Council with 600 companies highlights the fact that business this year perceives informality higher than in 2019.

"Agriculture, processing, industry and services perceive more informality. Energy perceives less informality compared to other sectors." – observes the survey.

Likewise, in the survey of 600 companies, fiscal evasion is confirmed as the main form of informality over the years, followed by undeclared work and non-registration. Even the progress report of the European Commission for Albania this year highlights the same problem. A large informal economy hinders the business environment and competition - it is emphasized in the EC report for 2024. Faktoje.al