Albanian wages are the lowest in region

Tirana Times
By Tirana Times April 20, 2019 14:47

Albanian wages are the lowest in region

Story Highlights

  • According to EU’s Purchasing Power Standard, a unit which eliminates the differences of price levels between countries, it is estimated that Albania’s minimum wage is the lowest in Europe for buying products and goods, as the people make little money but have expensive prices.

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TIRANA, Apr. 18- The minimum wage in Albania is 211 euros, while in Macedonia 240 euros, according to Eurostat data referring to January 2019. But, in absolute terms, the minimum wage in Albania is as much as 89 percent of that in Macedonia, an individual with one minimum wage in Albania can buy only 75 percent of the goods and services amount purchased in Macedonia.

Albania has not only the lowest wage in the region and EU in absolute value, but especially the difference is very high according to Purchasing Power Standards, a European Union unit that enables comparison between states by eliminating price differentials between them, and by measuring how many units and services you can buy for the same amount of money. Those who get paid with a minimum wage in our country buy less volume of goods and services than even the least paid in the region. This means that money has much less value in Albania, due to higher product prices in relation to income.

Eurostat has calculated the minimum wage level in the European Union, candidate countries including Turkey, and the United States, based on the Purchasing Power Standard (PPS). In 2019, an Albanian with a minimum wage as determined by law, gets at the end of 389 PPS. The minimum wage in Albania expressed by the PPS is as much as 75 percent of the minimum wage in North Macedonia. With the PPS method, the minimum wage in North Macedonia is estimated at 509 PPS per month, in Montenegro 525 PPS per month, while in Serbia 578 PPS per month.

Turkey for example has a minimum wage valued three times greater than Albania. Eurostat has calculated that the minimum wage in Turkey is 1,177 PPS per month. This means that with the minimum wage in Turkey you can buy three times more volume of goods and services. The minimum wage in Turkey is 422 euros, which is double that of Albania in absolute value, but actually worth three times more.

Purchasing Power Standard (PPS) is an artificial reference of a common currency unit used by the European Union, which eliminates the differences in price levels between states. So the PPS metering unit allows you to buy the same amount of goods and services in all countries. This unit gives you the opportunity to compare economic indicators between states. Aggregates expressed in PPS are calculated by dividing the aggregate expressed in current prices and in the national currency with Purchasing Power Parity (PPP).

The fact that the Albanian currency has little value is also shown to other Eurostat data on food expenditures. According to these figures, for Albania, nominal food costs accounted for 31 percent of the Gross Domestic Product (GDP), which measures the production of the economy in one year, and the income earned from work and property. Compared to the EU average, spending on food in relation to what the economy produces in a year is much higher. For the EU average, this indicator is only 6 percent of GDP, with the highest in Romania at 15.8 percent, and the lowest in Ireland and Luxembourg with 2.7 and 2.6 percent, respectively.

Even in relation to other regional countries, Albanians and Kosovars use the bulk of the money they have available on food. For Serbia, this indicator is 15.6 percent of the country's GDP, for Northern Macedonia is 19 percent, and the highest is for Bosnia and Montenegro, respectively about 23 and 24 percent.

Tirana Times
By Tirana Times April 20, 2019 14:47