Albania offers baby bonus hikes to fight sharp decline in birth rates

Tirana Times
By Tirana Times September 27, 2018 12:47

Albania offers baby bonus hikes to fight sharp decline in birth rates

Story Highlights

  • The incentive comes as birth rates in the country have seen a drastic cut in the past 28 years and the country’s resident population has been declining and getting older, posing a threat to the country’s emerging economy and public finances

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TIRANA, Sept. 27 – With birth rates having hit a historic low and the population rapidly growing older due to drastic changes in lifestyle and massive migration following the collapse of the hardline communist regime in the early 1990s, the Albanian government has unveiled a social reform encouraging Albanian parents to have more children through a sharp hike in baby bonuses.

Prime Minister Edi Rama says parents will receive up to 120,000 lek (€945) in cash bonuses for their newborns starting next year in hikes of up to 24-fold as part of incentives promoting higher birth rates and increasing child support.

Albanian parents currently receive only a modest 5,000 lek (€40) in one-off bonuses for their newborns, an amount that has remained unchanged since the early 2000s when it was introduced by Edi Rama, then serving in his first term as Tirana Mayor before it expanded nationwide in 2008 as a welcome cash gift.

However, getting the modest cash gift often takes Albanian parents up two years due to late and complicated disbursement of funds.

The newly proposed cash bonuses, which the government is planning to disburse in instalments until children become one year old, are set to increase 8-fold to 40,000 lek (€315) for the first child, double to 80,000 lek (€630) for the second child and treble to 120,000 lek (€945) for the third or more children.

"That is a measure which in our calculations will promote higher birth rates, but the most important thing is that it is an incentive for everybody with no difference for all families having children in Albania," Prime Minister Edi Rama said.

"That is a nationwide bonus that will be awarded in real time in the course of one year to families under a new mechanism that is going to be set up. The next challenge will be extending the reward in more than one year, but that is another topic," Rama added.

The incentive comes as birth rates in the country have seen a drastic cut in the past 28 years and the country's resident population has been declining and getting older, posing a threat to the country's emerging economy and public finances.

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, according to official figures.

The number of newborns dropped to around 31,000 in 2017, down from 82,000 in 1990 just before the collapse of the communist regime when Albania had one of Europe's highest fertility rates, according to Albania's state statistical institute, INSTAT.

Experts say the decline in Albania's birth rate is a result of cultural changes in the typical Albanian household during the past quarter of a century of the country's transition to democracy and a market economy, lower marriages and fertility rates and high migration rates which in the past few years transformed into asylum-seeking in wealthy EU member states.

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.

Massive migration in the past quarter of century, mainly to Italy and Greece, the hosts of around 1 million Albanian migrants, has also contributed to lower birth rates in the country.

Albania has around 1.2 million migrants abroad, almost 40 percent of its 2.8 million resident population, making it one of the countries with the highest per capita migration around the world.

Experts says Albanians are mostly leaving the country because of economic reasons, looking to escape poverty in their homes but also to integrate into leading European economies and take advantage of better education, health and social protection infrastructure for their families.

International financial institutions have also warned shrinking populations, such as in Albania's case, pose a formidable fiscal challenge, placing public finances under pressure on increased spending on pensions and health, reduce economic growth and make it more difficult to reduce public debt as a share of GDP.


Wage hike

Prime Minister Edi Rama also announced a wage hike for employees in the public education and health sector as well as in the military for next year following a freeze in this year's wage hike after a mid-year budget cut.

In addition to revising downward central government spending and revenue targets, the mid-year changes to the 2018 budget also cut dozens of public administration jobs and canceled funds that were initially intended for public administration salary hikes.

A 1 billion lek (€7.9 mln: $9.2 mln) fund initially intended for salary hikes was cancelled, but year-end rewards to pensioners provided under a 3 billion lek (€23.7 mln; $27.7 mln) solidarity package turned into law in early September.

The wage hike initiative comes as the ruling Socialist Party comfortably governs alone in its second consecutive term of office and public finances have recovered following a series of rather tough reforms in the electricity, water supply and fighting tax evasion in the past five years, often criticized for targeting the poorest and leading to massive departures from the country, especially on ungrounded asylum-seeking.

The initiatives also come as the country will be heading to local elections in mid-2019 and the ruling Socialists target to continue running the country's largest municipalities.


Tirana Times
By Tirana Times September 27, 2018 12:47