TIRANA, feb.28- The government increases the minimum wage by 12.5 percent with the new level of 16.000 lek replacing the current one of 14.500 lek. This decision Prime Minister Berisha argued reflects the changes in the economic outlook of the country. The decision has been proposed since last year but was postponed by the Finance Ministry after business interest groups protested. The fason industries which account for more than half of the exports say that they will be hurt by the new obligations since more than half of their production costs come from labor compensation.
Other decision included the increase of welfare payments by 14.2 percent and the determination of overtime hourly rate of 92 lek.
Contradictory measures for FDI
Experts argue that the increase in minimum wages produces an opposite effect in the struggle to attract FDI by increasing labor costs, which are then advertised as being a comparative advantage in Albania. The business association protested the increase saying that it drives out of business foreign joint ventures since they outsource labor to other countries if it is cheaper. However the rise in the minimum wage is a measure advocated by the government for many purposes among which indexing the inflation and fighting informality in the labor market. Berisha said that this should not be considered an interference in the market but the fulfillment of an international standard which is an obligation for all governments.
