Berisha Pledges Pay Hike In July

Tirana, May 21 – With these words, Prime Minister Berisha announced to media during the cabinet meeting on Wednesday that he is decided to increase the wages in July 2008. The Minister of Finances, Ridvan Bode came with a similar declaration last week. “The government declared that it shall raise the wages and pensions. In four years, we shall double the pensions and the low wages. On July 1, 2008, we shall raise wages much more than the level of inflation. We shall continue to support the consumers”, Bode said. According to Bode, Albania is not experiencing any economic crisis and it has the lowest inflation in the region. Therefore, the planned increase of wages and pensions is not going to raise the inflation. On the contrary, it shall preserve the purchasing power of the Albanian consumers and induce further economic growth.
It remains still unclear who is going to benefit from the wage increase and how much. The Ministry of Finances declared on April 24, 2008, that the contingency fund was going to be increased from ALL 4.6 billion to ALL 6 billion (roughly Euro 50 million) in order to guarantee the increase of wages by 10 percent for all the state employees, the increase of pensions in villages by 1o percent and in cities by only 5 percent.
However, despite his Wednesday’s declaration, Berisha is refusing to give further details about the increase of wages. Berisha said that the government had earned some Euro 10 to 15 million more from the custom duties on corn and flour. According to the official press release, “the government has allocated Euro 15 million for the compensation of the pensions and low wages, for the bread that is more expensive”. However, Berisha failed to explain if these Euro 15 million were allocated for the increase of wages in July or for the compensation of the families in need. If the government decides to use only Euro 15 million, it respects the advice of the IMF, protects the families in need, but fails to keep its political promises. Between 90,000- 100,000 families are treated with economic help that varies from ALL 1,600 to ALL 2,300 per month per family. In addition, some 6,000 state employ are paid minimum wage. However, if the government decides to use more than that, then it runs the risk of causing a wage-prices inflationary spiral.
This year, the government has planed to use Euro 100 million for the economic help, Euro 570 million for wages, and Euro 200 million to fill the deficit in social insurances (pensions, health care, etc).