Minimum wage workers to pay more in taxes

TIRANA, July 2 – The increase in minimum wages by 1,000 lek to 21,000 lek starting from July 2012 will have minor impact on dozens of thousands of workers receiving minimum monthly wages. The government decision foresees the minimum wage to calculate contributions will increase by 4 percent to 18,295 lek and as a result the monthly amount to benefit pension to 5,104 lek from 4,894 lek currently. The decision affects a majority of workers in the garment and footwear factors who receive minimum wages and self-employed people.
The maximum wage to calculate contributions has also increased to 91,475 from 87,700 currently. People self-employed in the agricultural sector, who account for around 50 percent of the population will suffer the biggest increase having to pay 27,000 lek annually, from 21,600 currently.
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 government decision.
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.
Starting from July 2012, salaries for the public sector will increase by an average of 5 percent while pensions by 4 to 5 percent.