Ageing population, migration rated as key threats to Albania’s poor labor productivity

Tirana Times
By Tirana Times August 13, 2018 19:11

Ageing population, migration rated as key threats to Albania’s poor labor productivity

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  • “A potential concern is that Albania’s population is aging, which over the medium and long term will put pressure on productivity growth. High outmigration implies that part of the productive workforce is abroad – often the most educated, although no recent data exist on this,” says the World Bank report

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TIRANA, Aug. 13 – Rapidly ageing population and high migration rates pose key threats to Albania’s labor productivity which already remains Europe’s poorest performing, warns the World Bank.

In a report examining job dynamics in the country, the World Bank describes Albania’s labor productivity, measured as GDP output per worker, as the lowest in Eastern Europe.

“Labor productivity levels are low in Albania – lower, in fact, than in any other country in Eastern Europe. Labor productivity, measured as GDP output per worker, was about US$31,000 per worker in Albania in 2016, while it was US$60,000 per worker in Lithuania, US$57,000 in Estonia, and US$48,000 in Romania,” says the World Bank.

The report says that rapidly ageing population as a result of massive immigration and lower birth rates are expected to have a negative effect on labor productivity growth over the medium to long run.

Albania’s population, although still one of Europe’s youngest, has been rapidly ageing in the past quarter of a century, with massive migration playing a key role. Albania has around 1.2 million migrants abroad, almost 40 percent of its resident population, making it one of the countries with the highest per capita migration around the world.

Albania’s average population age has increased to 37 in only a quarter of a century from about 25 years old in the late 1980s just before the collapse of the communist regime when then-Stalinist Albania boasted one of the world’s youngest populations.

“A potential concern is that Albania’s population is aging, which over the medium and long term

will put pressure on productivity growth. High outmigration implies that part of the productive workforce is abroad – often the most educated, although no recent data exist on this,” says the World Bank report.

Poor compensation, rule of law and inefficient education and health sectors are the main reasons driving Albania’s most productive labour force abroad, in much higher rates compared to most regional countries, except for Bosnia and Herzegovina.

GDP per capita in Albania and other EU aspirant Western Balkan countries is estimated at only a third of the EU average at a time when consumer prices are at only a third below the EU-28 average, according to Eurostat, the EU’s statistical office.

World Bank experts also warns of risks facing Albanian youth who are neither working, nor building skills, estimated at 30 to 40 percent of youngsters aged between 15 to 29 years old, twice as high as the EU average.

“Given the low productivity and demographic pressures facing Albania, the high share of young people neither improving their future productivity through schooling nor contributing to productive work is an additional drag on economic growth and development,” says the report.

The World Bank says Albania’s job creation in the past few years has mostly been in self-employment and in less productive jobs than existing jobs, largely benefiting adults and low-to-medium-skilled workers with fewer opportunities for those with higher levels of education.

One out of four jobs in Albania are in the low-productivity trade and repair sector.

About half of the country’s population is also employed in the little productive agriculture sector which due to land fragmentation, poor financing and small level of subsidies generates only a fifth of the country’s GDP.

An earlier World Bank report examining labor market trends in the Western Balkans showed that at 40 percent, Albania has the region’s highest informal employment. The high levels of informality are mainly a result of self-employment in the agriculture sector where only few dozen thousand farmers, about 10 percent of the total, are registered with authorities.

 

Population, ageing risks

Albania’s natural population growth registered negative growth in the first quarter of this year as the number of deaths slightly exceeded births in a dramatic but warned situation that takes place for the first time in nine decades since Albania established a civil registry in the late 1920s.

Once the country with the highest fertility rate under communism, Albania has seen its average number of children per woman drop to 1.78, down from 3 in 1990 just before the transition to a multi-party system and a record 6 in the early 1960s, which has contributed to the population shrink and ageing.

The World Bank has earlier warned the recent fertility decline in Albania has been dramatic and rapid. “For example, the shift from an average fertility rate of over five children per woman to below the population replacement rate took two centuries in France but only 34 years in Albania,” the World Bank says in its Golden Ageing report.

The latest 2011 census showed Albania’s resident population dropped by 8 percent to 2.8 million people compared to a decade earlier due to lower fertility rates and high immigration. Prospects are pessimistic as the population is expected to undergo another decline in the next few decades.

The Albanian economy grew between 1 to 3 percent annually in the past nine years, compared to a pre-crisis decade of 6 percent annually, the growth rate estimated to bring tangible welfare to Albanian households, considering the current stage of the country’s economic development.

 

 

 

Tirana Times
By Tirana Times August 13, 2018 19:11