TIRANA, May 2 – Foreign companies operating in Albania pay their staff twice as much the average wage in the Albanian private sector, according to a report by the country’s state statistical institute, INSTAT.
Data shows the gross average monthly wage among foreign-owned enterprises operating in Albania was at 71,000 lek (€511) in 2015, down from 75,700 lek (€544) in 2014, but more than twice the gross average wage of 33,900 lek (€244) among Albanian enterprises.
Experts explain the huge gap with the more lucrative sectors foreign companies operate in, their practise of declaring real wages with tax authorities and the high wages some of their foreign executives receive. Foreign companies in Albania dominate the key telecommunication, banking, transport, oil and mining industry as well as some other main services where wages are higher than in other sectors.
By contrast, the average wage in Albanian joint ventures with foreign companies was at 55,400 lek (about €400) in 2015.
INSTAT data shows there were some 3,500 foreign companies and some 1,800 joint ventures with Albanian partners at the end of 2014, accounting for less than 5 percent of total enterprises in the country, with half of them being Italian or Greek-owned. Big foreign-owned enterprises employing more than 50 people mainly operate in the garment and footwear sector and call centers where they make use of Albania’s cheap labour costs but also in the banking sector where wages are among the country’s highest.
However, the gender pay gap in foreign-run enterprise is huge with males paid up to 55 percent higher compared to a nationwide gap rate of 7 percent.
Albania’s average gross wage slightly rose to by 2.8 percent to 46,900 lek (€337) at the end of 2015 while the gender pay gap dropped to 7 percent, down from 10 percent in 2014.
Average wages in the public sector slightly dropped by 1.5 percent to 54,205 lek (€390) in 2015, after consecutive increases during the past decade.
Business executives, IT specialists and senior public administration officials had the highest wages in 2015. Those employed in the agriculture and textile sectors received the lowest wages.
The mining and quarrying industry which has been hit a by a sharp cut in commodity prices since mid-2014 cut its average wages by a third to 63,835 lek (€460) at the end of 2015.
The private sector, which accounts for around 80 percent of Albania’s GDP and employs the overwhelming majority of four-fifths of the country’s population, has frozen wage increases during the past crisis years, losing its competitiveness to the smaller public sector.
INSTAT data shows the private sector kept average monthly wages at about 36,000 lek (€253) from 2009 to 2013, a situation which continued even in 2014 and 2015. Meanwhile, consumer prices have increased by a total of 18 percent over 2009-2015, which along with the sharp decline in migrant remittances, is one of the main reasons for sluggish domestic consumption.
The public sector, which employed 163,810 people at the end of 2014, increased wages by around 30 percent during 2009-2014, becoming more attractive to employees.
Wages in the public sector rose from 40,874 lek (€287) in 2009 to 53,025 lek (€372) at the end of 2014, according to INSTAT.
The minimum wage increased from 18,000 lek (€126) in 2009 to 22,000 lek (€154) in 2014.
Widespread informality in the private sector often makes official wages underreported to avoid paying taxes.
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. People receiving up to 30,000 lek (€216)/month are stripped of their personal income tax, which is one of the reasons most wages in the private sector are officially reported at that level.
Albanians work the longest hours and are among the poorest paid in Europe, according to an earlier INSTAT survey.
Albanians work an average of 2,102 hours a year and cost employers only Euro 2.2 per hour, ranking Albania the cheapest country in Europe in terms of labor costs for employers, but the worst in terms of income for employees.
