The Albanian government announced its ambitious plan to increase the average salary in the state sector, aiming to get closer to the region in terms of average salary within two years. Currently, Albania holds the last place in the region for this indicator, but according to the plan, the average salary in the state sector is estimated to reach 900 euros by 2024, with an increase of 270 euros from the current level. Economic experts see this as a form of compensation for the declining purchasing power and increasing prices, undertaken for electoral purposes.
In Albania, the average salary of an employee in the public sector at the end of last year was 70 thousand ALL (620 euros). But within 2024, the government intends to increase this indicator by 30 thousand ALL (27 euros).
“We now have a very ambitious plan, but at the same time reasonable enough for a salary increase, which aims to enable the rise of Albania to the top level of the region in the course of these years, i.e. 2023, 2024. ” , Prime Minister Edi Rama declared at the end of March, as he announced the plan for this unprecedented salary increase in the state sector.
According to Rama, the initiative ‘Actually aims to achieve a target of an average salary of 900 euros, which means that we now have a new opportunity, an opportunity that we will use as much as we can for individual people and families to benefit. Following the increase of the minimum wage, we can now go towards the increase of the average wage, which, as I already said, we will do in two stages.’
The official INSTAT data on the average monthly salary in the state sector show that since the coming to power of Rama government and until the end of 2022, this indicator has increased by only 17 thousand ALL. However, what hasn’t happened in all these years, Rama commits to make it happen in 24 months. The Prime Minister intends to increase the average monthly salary to 102 thousand ALL in the tenth year of governance, but a detailed plan has not yet been shared with the public.
“Currently there is still no published plan with details from the relevant institution.” – writes in a response to Faktoje, the Agency for Media and Information further quoting the prime minister “We will soon have a gradual increase for some. We will discuss in details after the approval, which will happen over the 0-15 coming days. Of course, we will also publish the full plan, so that everyone knows what will follow.”
How many employees will benefit from the average wage increase?
The latest official data from INSTAT for 2021 show that the total number of employees in the public sector is 183 thousand 255 people. Since 2014, employment in the state has increased by a total of 19,370 people.
K.L. is one of them. Five years ago, she got a job as a specialist at a state institution, through a competition opened by the Department of Public Administration. The gross salary she currently receives is 65,200 thousand ALL or 580 euros.
As a specialist, I am paid with salary category 3B. My net monthly salary is 67,000 lek or 576 euros, plus work experience increases.’ – she notes, adding that she welcomes the plan for the further increase of the average salary.
‘The last salary increase for me was made in September last year with a 4,200 lek (38 euro) salary increase.’
How much will the salary increase cost the budget?
Calculations with current data show that the government will need 51.3 million euros to increase the average salary for the public administration.
|70,000 lek = 620 euros|
|900 euros – 620 euros = 280 euros|
|Number of employees in the public sector|
|183,255 × 280 euros = 51.3 million euros|
Real or fictitious growth?
‘These are electoral, propaganda purposes, but we must be serious about such issues.’ – says Professor Selami Xhepa, as he adds that the budget has room to fulfill the government’s ambitious plan. However, more than a salary increase, Xhepa sees it as compensation for the declining purchasing power against high prices.
“There is room for budget increase for a simple reason because when we talk about salary increase now we are not talking about real salary increase, we are talking about compensation of real income, missing income and replacement of lost purchasing power.
It cannot be considered a real increase in income, but it is a compensation for the loss of purchasing power due to inflation. The gaps exist because if you look at the revenues in the budget, they have increased a lot and have not increased thanks to any economic growth, but due to price increase. So, this policy to increase wages compensates for exactly this, the increase in prices,” Professor Xhepa estimates for Faktoje.
Increasing the average salary for state jobs, but what about the private sector?
“Obviously, by increasing the salaries for the administration, it puts moral pressure on us, that is, the business, because people say it’s better to work in the state than to work in the private sector,” Arben Shkodra from the Union of Albanian Producers told Faktoje, emphasizing that this ‘is the only way to impact business’.
Shkodra adds that the average salary is related to business productivity. ‘I am a private business. I raise the salary because I can afford it, otherwise I don’t.’ – he further argues, explaining why he also considers the increase of the average salary for state jobs as a meaningless policy.
“Well, in order to do such a thing, you have to go ahead and say, OK, I’m increasing the average salary, but you would also have to tell us how the economy will grow in proportion to such policies. Or let’s say that I am taking some public policies, increase competitiveness, increase exports, increase domestic production, increase services, or started a new type of service in the economy, found some source of gas or oil. So, things of this nature, but not increasing salaries, which can not be a goal in itself. The goal in itself should be the growth of the economy, which consequently increases wages. But we don’t raise wages to grow the economy, because the economy doesn’t grow by raising wages.” – says Arben Shkodra.
Average salaries in the region
By increasing the average salary in the public sector, the government intends to influence the level of the general average salary in the country, bringing it closer to the countries of the region.
Last year, the average gross salary in Albania was 61,883 thousand ALL or 545 euros.
Compared to the latest official data available in other countries of the region, Albania and Kosovo have the lowest average gross salary in the Western Balkans.
“The low level of the average salary can also be related to the high level of employment in the agricultural sector, as well as the level of under-declaration of salaries that some studies estimate is higher than other countries in the region. But, above all, the low salary is related to the low level of productivity that Albania has,” says the expert on economics and finance Enton Duro.
But on the other hand, Albania and Kosovo are the two countries with the lowest income in the budget, in relation to the Domestic Production, under 30%, while in other countries, this indicator fluctuates between 30-40% of the Gross Domestic Product.
The average gross salary in other countries of the region fluctuates between 800-900 euros per month, while in Albania the average is 545 euros, a significant difference between the income received by an employee in Bosnia-Herzegovina, Serbia, North Macedonia, or Montenegro compared to an Albanian.
Referring to the data, Bosnia and Herzegovina has the highest average salary in the region with 893 euros. Then comes Montenegro and Serbia, respectively with an average salary of 885 euros and 880 euros. While in North Macedonia, the average salary is 780 euros.
*This article was produced as part of the regional initiative the Western Balkan Center Against Disinformation
Edited by: Viola Keta & Aimona Vogli