Minimum wage increases to Euro 142

TIRANA, June 26 – The minimum wage will increase by 1,000 lek to 21,000 lek (Euro 142) starting from July 2012 for all public sector employees and become compulsory also for the private sector starting from January 2013, according to a decision taken by the National Labour Council this week.
Speaking at the meeting Labour Minister Spiro Ksera said the decision would make Albania’s minimum wage equal to Bulgaria.
“According to a 2011 study, Albania had the lowest minimum wage in the region despite annual increases. Albania’s minimum wage is at 142 Euros compared to Bulgaria’s 148 Euros, Romania’s 161 Euros, Serbia’s166 Euros,” said Ksera.
The decision to postpone the decision for the public sector by six months was taken after the business community, and especially exporting companies had complained an increase at this moment would add to the difficulty they are facing. Garment and footwear producers, the country’s top exporters who are facing lower demand from crisis hit EU partners had appealed for a freeze in the minimum for a 3-year period. “The freeze of minimum wage increase for our sector would be great support for us to eliminate extra costs,” said association representatives.
The decision is also expected to be followed with an increase in the monthly minimum wage to calculate social security contributions. Currently, the minimum monthly wage to calculate social security contributions increases to 17,540 lek, from 16,820 lek. The maximum monthly wage to calculate contributions also rises to 87,700 lek, from 84,100 lek.
Social security contributions currently stand at 24.5 percent, of which 15 percent is paid by employers and 9.5 percent by employees. Meanwhile, health insurance contributions are at 3.4 percent, shared by 1.7 percent between employers and employees.
Government has also recently lifted reference wages for the private sector, a decision which had been in force since 2007.
Government is planning to remove the value added tax for imports of machinery and equipment and merge the national council of business and labour into a single body as part of efforts to improve the business climate and increase Albania’s competitiveness. Government says it will increase public sector wages and pensions even this year despite public finances being in a critical stage due to poor tax collection rates and rising public debt cost. Prime Minister Sali Berisha has announced that starting from July 2012 salaries for the public sector will increase by an average of 5 percent while pensions by 4 to 5 percent.
Informing that the increase will benefit 800,000 Albanian households, Prime Minister Berisha said “the increase is made at the most difficult time, at the peak of the Euro and debt crisis but at a time when Albania’s growth during the past four years has been four times higher compared to the average in the region.”
High wages are expected to increase by only 1 percent compared to 5 percent for low wages.