TIRANA, March 20, 2023 – Albania’s private sector salaries are increasing and doing so at a higher rate than public sector ones, as businesses struggle to retain workers competing with migration and the domestic labor market.
However, public sector wages continue to be, on average, higher, according to the latest INSTAT data from 2022’s fourth quarter.
The average salary for an employee in the state sector reached 74,450 Albanian leks (650 euros) with an annual increase of 5.6 percent, while the average salary in the private sector reached 62,198 Albanian leks (543 euros) with an annual increase of 14.5 percent compared to just a year earlier.
Growth at higher rates than in the public sector is narrowing the wage gap between the private and public sectors.
In 2018, the average salary in the private sector was 76 percent of the average salary in the state, while in the last quarter of last year this ratio reached 83.5 percent.
The private sector salary market is moving faster, driven by two main factors. First, all sectors of the economy are using wage increases to retain workers, who are less and less available due to increased out-migration and competition between domestic sectors, according to a Monitor magazine report.
Second, the government is increasing the minimum wage at a faster rate than at the beginning of the decade. With a recent decision, the minimum wage reached 40,000 leks at the beginning of April from 36,000 leks.
The need to keep and find employees is putting pressure on to increase wages.
Furthermore, many businesses are no longer applying minimum wages as it doesn’t help in retaining employees. Four years ago, almost 45 percent of employees were paid up to the minimum wage. Last year, in the third quarter of the year, this category accounted for only 15 percent of the total number of employees, according to the INSTAT report.
Albanian Prime Minister Edi Rama last week urged Albanian businesses to increase wages further to help keep people in Albania, a shift in his public narrative ahead of municipal elections.
He had earlier told businesses to hire Asian workers, making work permits easier, to fill gaps in the low-skill low-wage manufacturing sector.
Photo credit: Public domain illustration
