TIRANA, Nov. 23 – Albania’s unemployment rate registered a slight increase for the second quarter in a row this year but remained one of the lowest in the region, at 13.5 percent at the end of September 2010, if official data provided by the country’s Institute of Statistics (INSTAT), often described by opposition and some experts as controversial, are taken for granted.
Data published on Monday by INSTAT in a labour force survey showed the unemployment rate at the end of the third quarter of 2010 climbed to 13.52, up from 12.76 percent during the same period in 2009, but down 0.26 percent compared to the second quarter of 2010.
The improved situation compared to the previous quarter was mainly a result of higher employment rates in the private agricultural sector covering rural areas where people possessing land are automatically calculated as self-employed because of possessing land. INSTAT data indicate the number of people self-employed in this sector rose by 10,474 reaching 506,664 in September 2010. The latest survey covering this sector was conducted back in the fourth quarter of 2009 when the number of jobless people stood at 496,190.
Despite criticism, INSTAT says that calculating all people who own land as self-employed is in compliance with the methodology used by Eurostat.
Albania’s total labour force at the end September climbed to 1.059 million, around 9,700 people more than last June. Meanwhile, the number of total employees, including the public, private non-agricultural and agricultural sectors rose to 915,981 people.
Data show private companies hired only few hundreds of new employees in the third quarter of this year, a sign proving the financial difficulties small and medium-sized enterprises as well as corporations are experiencing.
The number of total employees in the private non-agricultural sector rose by only 557 to 242,717 people compared to the second quarter of 2010.
INSTAT data show newly employed people in the public sector remained almost unchanged at 166,600, only 100 more compared to the previous quarter.
Registered jobless people at the end of the third quarter of 2010 dropped to 143,218 compared to 144,641 in the second quarter and 142,062 in the third quarter of 2009.
Only 10,205 people, some 7.1 percent of the total people who have declared themselves as jobless at employment offices, benefited modest assistance of 6,565 lek (65 dollars) per household during the July-August period.
The minimum wage remained unchanged at 19,000 lek, under a July 2010 decision when government increased it by another 1,000 lek (10 dollars).
Albania’s unemployment rate continues remaining high despite a slight decrease compared to the first quarter of this year and signs of economic recovery. INSTAT data show the jobless rate in the second quarter of 2010 dropped to 13.78 percent, down from a record 13.83 percent in the first quarter when the GDP grew by 2 percent.
The unemployment rate registered its sharpest increase at the end of 2009 when it climbed to 13.75 percent, up from 12.68 percent at the end of 2008.
Experts say the situation is a result of the crisis in the construction sector which continued its poor performance even in the first half of this year registering sharp negative growth rates.
Regional comparison
Regional comparison shows Albania’s unemployment rate at 13.5 percent at the end of September 2010 is far better compared to Macedonia, Bosnia and Herzegovina and Kosovo, standing at 4 percent more than the EU 27’s average of 9.6 percent.
Unemployment in neighbouring Macedonia, at an estimated record of 33.8 percent, is the world’s highest, according to a study by 24/7 Wall St. economic portal published last June. Bosnia and Herzegovina which has also been granted visa-free travel in the Schengen area, ranks the world’s fifth country for the highest unemployment at a rate of 23.4 percent, according to the same study.
Unemployment in neighbouring Kosovo, which was not included in the study, is probably the world’s highest. Official data by the Kosovo Statistical Office show unemployment rate in the majority ethnic-Albanian populated country stood at a record of 45.4 percent at the end of 2009.
Albania’s main trade partners Italy and Greece are also suffering high unemployment rates of 8.3 and 12.2 percent respectively, according to Eurostat data on September. The situation in these two countries, where more than one million Albanian immigrants live and work, has also affected thousands of them, with many returning home after being unable to find a job because of the ongoing crisis.
Eurostat data show Spain has the highest unemployment rate of 20.8 percent in the EU 27 followed by Ireland with 14.1 percent.
EC on unemployment
The Albanian labour market is characterized by a high inactivity rate, which in recent years stood at just below 40%, said the European Commission in its latest report on Albania. Informal work arrangements remain widespread across most economic activities notwithstanding several initiatives to tackle them, including a reduction in social contributions. High long-term unemployment, which accounts for around 65% of total jobseekers, is another characteristic of the Albanian labour market. Female participation and employment rates are significantly lower than for males, while unemployment is higher.
Although official labour market data comprise a high degree of uncertainty, unemployment has remained persistently high, reflecting the low education level, the outdated skills of the jobless and undeclared work, which help in alleviating poverty but reduce job-search incentives.
Overall, active labour market programmes are insufficient compared with the level of unemployment, while work-related training remains a challenge, says the EC.
Unemployment stands at around 13.8%, but the official unemployment rate does not correctly reflect the actual unemployment in the country. The rate of long-term unemployed and discouraged jobseekers is high, whilst at the same time the Albanian labour market experiences substantial skills mismatch problems. Informal employment is widespread.
In the first years of transition unemployment soared, reaching its peak at 23% in 1993. It was then slowly reduced mainly due to migration. In the aftermath of the pyramid scheme crisis unemployment increased again. Since 1999, it has been progressively reduced, however, it remains high standing at 13.8% in 2009.
Business, consumer confidence dropping
Despite the economy returning to normal growth rates after a shrink in the last quarter of 2009, business and consumer confidence registered an unexpected drop in the third quarter of this year following a turning point of confidence boost about the economy reported in the first half of this year. The increased pessimism of Albanian businesses and consumers is proved by the latest survey carried out by the Bank of Albania which showed the Economic Sentiment Indicator (ESI), measuring consumer and business expectations, dropped by 6.2 percentage points in the third quarter, remaining 10 points below its historical average.
Consumers, who said the cost of living increased compared to the second quarter, expect the unemployment rate to increase during the remaining of 2010. “Some 38.9 percent of consumers expect the unemployment rate to increase compared to only 18.9 percent who are optimistic,” said the survey.
The deterioration was mainly influenced by a sharp drop of confidence in the crisis-hit construction sector. The industry and consumer confidence indexes also underwent modest drops. The services sector businesses were the only category showing signs of optimism, despite the confidence index registering a slight decrease compared to the second quarter of 2010.
