REPUBLIC OF ALBANIA MINISTRY OF LABOUR AND SOCIAL AFFAIRS

THE WORLD BANK

CONFERENCE ON LABOR MARKETS, GROWTH AND POVERTY REDUCTION STRATEGIES

Thesaloniki, Greece (May 27-28, 2005)

Topic : Labor Market, Wage Disparities and Poverty

Presented by: Ahmet CENI, Deputy Minister Of Labor and Social Affairs

LABOR MARKET, WAGE DISPARITIES AND POVERTY

1.Introduction2.The characteristics of labor market in

Albania;3. Wage disparities and poverty;4. Problems;5. Ways of intervention;

1.INTRODUCTION

During ’90, Albania was characterised by :

Mass unemployment and hight inflation; Stabilization of economy in the first phase in 1996

and at the end of 1999, after the second crash; Implemented sensitive structural and institutional

reforms; During the period 1998-2003 GDP is increased

constantly 6- 7 %.

2. GENERAL ANALYSE OF LABOUR MARKET

1.The participation of labor force and the level of employment.

2.The level of unemployment and its forms (reasons)3.The structure of unemployed4. The unemployed according to the time that they

are registered at the emplyment offices5. The unemployment analyze according to the

professional status,6. The afflux analyze in the labor market

2.1 The participation of labour force and the level of employment :

a. Total population 3 135 000b. Active working age population 1 863 000c. The participation on the labour market 1 088 000d. The rate of participation c/d 58.4 %e. The total number of employed 931 000f. The level of employment e/c 60.8 %

2.1.2 Participation according to sectors

a. Agriculture 50.5 %b. Construction 6.6 %

2.1.3 Participation according to ownership:

a. Public sector 176 000b. Private sector non agriculturalc. Private sector agricultural

2.2 The level and the forms of unemployment

a. Structural unemployment;

b. Conjectural unemployment;

c. Fractional unemployment.

2.3 The structure of unemployed

a. Based on gender view:females 17.5 %males 12.4 %total 14.4 %

b. Based on the regions:Northern area 25.8 %Central area 13.4 %Southern area 13.6 %Tirana district 7.6 %

2.3 The structure of unemployed

c. Based on age:age 25-45 comprise 57.1 %age > 45 comprise 26.6 %

d. Based on education level:elementary school 53.3 %high school 45.1 %university 1.6 %

2.4 According to the time being unemployed

a. Long term unemployed60 %

a. Most of long term unemployed over 45 years old

2.5 Unemployment according to professional status

a. Workers 50 % andb. 29 % of them are job seeker without a

professionc. Agriculture workers 20 %

2.6 The analyze of the flow in-out on the labour market for 2004

Unemployed (31.12.2003) 163 030 Entering during 2004 33 392 Going out during 2004 39 414 The situation at the end of 2004 157 008

3. DISPARTIES ON THE WAGES AND POVERTY

3.1 The minimum living standard was established; 3.2 The minimum wage was fixed;3.3 The real wage and poverty;3.4 The rapport of minimal wage with average wage3.5 The minimal and average wages were increased;3.6 Minimal wage and social benefits3.7 The disparities on the level of wages between

sectors

3.1 In 2001 the minimum living standard was established.

8860 lek per capita, or equal to 90 USD. 14888 lek per employee, or about 150USD, 24426 lek per one family with 4 persons, or

about 250 USD per month. The minimum living standard was made in

collaboration with the Trade- Union

3.2 The obligatory minimum wage was fixed.

actually it is at the level 10800 lek in month, or about 110 USD.

Actually the minimum wage is 16 time more than in the year 1992 ,

At the non budgetary sector, the minimum wage has an important role in the protection of the poor part of the population

3.3 The real wage and poverty,

The inflation was higher than the wages &pensions growth during the 90-93 period

Because of this it was an reduction of the real wages,

During the years 94-96, the wage growth was higher than the prices increase

The real incomes are increased as follow:

Years Inflation Real wage

1994-96 33.2 +19 %

1997 32.1. -16.9%

1998 20.9 +1.0%

1999 0.4 +10.0%

2000 0.00 +17.0%

2001 3.1 +11.6%

2002 5.2 +8.1%

2003 2.4 +6.0%

2004 3.0 +

3.4 The ratio between the minimum wage and average wage

The minimum wage is increased more than the average wages, during the years 2000-2004 , in order to approximate to the indicators of the minimum living standard.

The ratio between the minimum wage and average wage was reduced from 0,79 in 1990, to 0,37 in year 2001, and now it is 0,47.

3. 4 the minimum and average wage growth .

minimum and average wage in years

0

5000

10000

15000

20000

25000

95 96 97 98 99 0 1 2 3

years

min

aver

3.5 Minimum wage and the social benefits

a. Minimum pension is calculated 70% of the minimum wage;

b. Unemployment assistance is 64 % of minimal wage;

c. The social assistance tend to go to minimum living standard ;

d. Invalidity pensions tent to go to minimum living standard.

3.6 The Differences at the wage level between the economic sectors

3.6.1 the disparities between sectors according to the ownership. (Look at the table / shih tabelen)

3.6.2 the level wages differs between different sectors according to the economic activity. (Look at the table/ shih tabelen)

3.6.3 The disparities of wages according to the regions.

3.6.1 The disparities of wages according to the ownership of sectors.

Wages interval Budgetary Non Budgetary Firms

Number of employee The structure in %

Number of employee

The structure in % Number of employee

The structure in %

to 10800 1489 1.2 849 1.9 43079 51.3

10800-14000 12860 10.0 4544 10.2 18780 22.3

14001-18000 33766 26.4 12557 28.2 9426 11.2

18001-25000 43279 33.8 13386 30.1 6499 7.7

25001-37000 26610 20.8 9016 20.3 2684 3.2

37001-51000 9968 7.8 4109 9.2 3558 4.2

Total 127972 100 44461 100 83986 100

3.6.2 the level wages differs between different sectors according to the economic activity

Economic branch Minimum wage Average wage Ratio

min wage/ average wage

Shipping 9400 48499 0.20

Rail transport 9400 13916 0.67

Roadway transport 10583 15000 0.70

Fishing 9000 14167 0.64

Manufacturing grocery industry 8667 12834 0.67

Textile industry 8083 12750 0.63

Hotels and restaurants 9000 12750 0.71

Electricity, gas and water supply 12917 16384 0.79

Construction 8750 16250 0.54

Leather, shoes industry 8250 15417 0.54

Plastic Manufacturing industry 9083 28334 0.32

Paper Industry 7667 16416 0.47

Chemical Industry 9083 28334 0.32

Metal manufacturing industry 10417 24250 0.43

Mining Industry 8917 27417 0.33

Telecommunication 9000 35917 0.25

Wholesale trade 8917 15750 0.57

National average 9400 18680 0.50

average wage according to economic activity, 2002

19179

40000

50000

18697

26278

32483

2186016384 16338

13000 12482 12000 108138000 7985

1868014184 14320

0

10000

20000

30000

40000

50000

60000

in le

ke

3.6.3 The disparities of wages according to the regions

The average wage in the northern area is 50 % of the average wage of central area,

The average wage in the southern area is 80 % of the average wage of central area,

4. THE PROBLEMS After the appliance of an income policy for the reduction

of the poverty: Albania has 123000 families at the poverty level with

incomes less than 2 USD per capita in day about 30000 families with incomes less than 1

USD/day There is long term unemployment There is high emigration The growth economic rates do not cover the higher

supply of the work force

5. THE SETTLEMENT WAYS.

One of the most important document is ;

1. National Strategy for Social-Economic Development (NSSES ),

2. The increase of the quality and the flexibility of the vocational training system

3. The enlargement and the modernization of the information services and intercession at work.

4. The appliance of the special employment programs for the poor category

5. THE SETTLEMENT WAYS:

5. The establishment of the conditions for the functioning of the national and regional market on equal and non discrimination bases.

6. The reduction of the informality and the improvement of the legal system .

7. The linkage between the monetary- budgetary policies- development policies- employment policies.

8. The improvement of the structure of budgetary expenses in the favor of investments and increasing the control of to maximize their efficiency.