Albania’s top exporting industry at risk as workers turn down low-paid jobs

Tirana Times
By Tirana Times May 9, 2018 17:14

Albania’s top exporting industry at risk as workers turn down low-paid jobs

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  • The garment and footwear sector, locally known as façon, has been producing the country’s traditional top exports in the past quarter of century of transition to a market economy, and currently employs more than 100,000 people in about 500 factories nationwide, being one of the top private sector employers

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TIRANA, May 9 – Garment and footwear companies in Albania have been facing rising difficulty in finding new workers in the past few years amid hesitation and refusal of potential employees to work for low wages, rising competition by call centers offering much better benefits and a new migration wave.

A businessman in Durres, the country’s second largest city, says he has some 300 vacancies in his garment factories but is having trouble finding workers as demand for new products increases

“Young men and women in the city feel offended to work in the garment and footwear sector although wages are much better compared to a decade ago while village youngsters prefer working in the agriculture rather than in factories,” entrepreneur Nazmi Grori is quoted by local Monitor magazine.

The situation appears the same even in other cities where shortage of workers is cited as a key concern for the sector producing the country’s top exports, but which mainly pays workers at minimum wages of 24,000 lek (€188), the lowest in the Western Balkan region, although experienced workers get much better.

“I am covering transportation costs. I have also increased wages and pay workers a minimum of 1,200 lek (€9.4) a day and a maximum of 1,700 lek (€13), but yet interest in working has declined,” says Jozef Bazhdari, the administrator of a textile factory in Shkodra, the country’s largest northern city.

Competition from the call center industry, employing about 25,000 workers and a wave of migration with about 100,000 Albanians having left the country to seek ungrounded asylum in wealthy EU members since 2014 seem to be the main reasons behind the situation.

In addition, wages and working conditions in garment and footwear factories are considered poor and few companies have shifted to a full cycle of production allowing them to offer competitive wages.

The garment and footwear sector, locally known as façon, has been producing the country’s traditional top exports in the past quarter of century of transition to a market economy, and currently employs more than 100,000 people in about 500 factories nationwide, being one of the top private sector employers.

Relying on cheap labor costs, the industry produces low value-added exports due to Albania importing raw material to produce garment and footwear products, the overwhelming majority of which are destined for Italy.

The sector is mostly involved in cut-make-trim production and overwhelmingly imports raw materials, designs and patterns but there are also a few emerging Made in Albania brand that have upgraded to full cycle production.

An earlier study has shown workers in Albania’s thriving garment and footwear factories face poor working conditions, overload and don’t even manage to get the minimum wage which is the region’s lowest.

The 2016 survey conducted by the Gender Alliance for Development Center showed half of the employees don’t manage to get the minimum wage at the end of the month because of penalties and the high quota of work they face despite having to work even Saturdays as a normal working day with no bonuses for working 48 hours a week in violation of the country’s Labour Code.

The garment and footwear sectors, Albania’s traditionally top exporting industry in the past two decades, saw its exports increase by an annual 10 percent to 117 billion lek (€866 million) in 2017, accounting for more than 40 percent of the country’s total exports, according to state-run statistical institute INSTAT.

The sector’s prospects seem grim and Albania could lose its cheap labour costs competitiveness unless its factories upgrade to full production cycle and increase wages that could appeal to jobless workers.

Albania’s exports are currently poorly diversified with three-quarters of them relying on ‘garment and footwear,’ ‘minerals, fuels and electricity’ and ‘construction materials and metals,’ exposing the country’s economy to industry-specific shocks such as the mid-2014 slump in commodity prices significantly reducing the country’s key oil and mineral exports.

Albania’s official jobless rate is at 13 percent and youth unemployment at about a quarter, but real figures are estimate much higher as people in rural areas possessing agricultural land are automatically counted as self-employed in the agriculture sector despite the modest income they manage to earn.

Tirana Times
By Tirana Times May 9, 2018 17:14