Albania with the lowest wage level in the Region, growth risks turning into a boomerang

The three-year plan for increasing salaries in the public sector has changed the structure of employees according to salary level.

In the last quarter of 2024, people with gross salaries of 60,001-95,000 lek per month accounted for 24.6% of the employed, the category with the largest share in the total number of salaried employees.

The category of employees with minimum wage accounted for 14.2% of the total number of employees in the last quarter of 2024, down from 24.5% which was the weight of this category in the third quarter and 26% in the same period last year.

In the last quarter of 2024, an increase in the share of employees with a gross salary of 95,001-120,000 lek per month was also observed. This category accounted for 12.8% of the total number of salaried employees, up from 7.7% in the last quarter of 2023.

There was also an increase in the category of high salaries over 120 thousand lek per month. They accounted for 14.1% of salaried employees in October-December 2024 from 10.7% in the same period of 2023.

In 2023, the largest category in total paid employment was those with minimum wages, but the growth reform in the public sector has affected the shift to higher levels.

The average gross monthly salary for a salaried employee, during the fourth quarter of 2024, is 83,401 lekë, increasing by 11.2%, compared to the fourth quarter of 2023.

Average wages in the public sector increased at higher rates than in the private sector, further widening the gap.

In the public sector, the average gross monthly salary reached 100.4 thousand lek with an annual increase of 14.3%. In the private sector, the average gross monthly salary reached 76 thousand lek with an annual increase of 9.5%.

The country's prime minister announced that in early 2026, the official minimum wage will reach 500 euros from the current 400. The government aims to promote another increase in wages in the private sector.

However, increasing wages without increasing productivity risks backfire, further increasing production costs and making domestic products uncompetitive.

Between 2022 and 2023, the minimum wage increased from 30,000 lek to 40,000 lek. Production costs in the manufacturing industry increased due to this decision, and many customers who previously produced clothing and footwear in our country did not accept the price revision and moved to other countries.

Despite recent increases, Albania ranks with the lowest wage level in the Balkan Region and Europe./ MONITOR