1. 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

2. LABOR MARKET, WAGE DISPARITIES AND POVERTY 1.Introduction 2.The characteristics of labor market in Albania; 3. Wage disparities and poverty; 4. Problems; 5. Ways of intervention;

3. 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 %.

4. 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 unemployed 4. The unemployed according to the time that they are registered at the emplyment offices 5. The unemployment analyze according to the professional status, 6. The afflux analyze in the labor market

5. 2.1 The participation of labour force and the level of employment : a. Total population 3 135 000 b. Active working age population 1 863 000 c. The participation on the labour market 1 088 000 d. The rate of participation c/d 58.4 % e. The total number of employed 931 000 f. The level of employment e/c 60.8 %

6. 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 176 000 b. Private sector non agricultural c. Private sector agricultural

7. 2.2 The level and the forms of unemployment a. Structural unemployment; b. Conjectural unemployment; c. Fractional unemployment.

8. 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 area25.8 % Central area13.4 % Southern area13.6 % Tirana district7.6 %

9. 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 school45.1 % university1.6 %

10. 2.4 According to the time being unemployed a. Long term unemployed60 % a. Most of long term unemployed over 45 years old

11. 2.5 Unemployment according to professional status a. Workers 50 % and b. 29 % of them are job seeker without a profession c. Agriculture workers 20 %

12. 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

13. 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 wage 3.5 The minimal and average wages were increased; 3.6 Minimal wage and social benefits 3.7 The disparities on the level of wages between sectors

14. 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

15. 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

16. 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

17. The real incomes are increased as follow: YearsInflationReal wage 1994-9633.2+19 % 199732.1.-16.9% 199820.9+1.0% 19990.4+10.0% 20000.00+17.0% 20013.1+11.6% 20025.2+8.1% 20032.4+6.0% 20043.0+

18. 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.

19. 3. 4 the minimum and average wage growth.

20. 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.

21. 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.

22. 3.6.1 The disparities of wages according to the ownership of sectors. Wages interval BudgetaryNon Budgetary Firms Number of employeeThe structure in % Number of employee The structure in %Number of employee The structure in % to 1080014891.28491.94307951.3 10800-140001286010.0454410.21878022.3 14001-180003376626.41255728.2942611.2 18001-250004327933.81338630.164997.7 25001-370002661020.8901620.326843.2 37001-5100099687.841099.235584.2 Total1279721004446110083986100

23. 3.6.2 the level wages differs between different sectors according to the economic activity Economic branch Minimum wageAverage wageRatio min wage/ average wage Shipping9400484990.20 Rail transport9400139160.67 Roadway transport10583150000.70 Fishing9000141670.64 Manufacturing grocery industry8667128340.67 Textile industry8083127500.63 Hotels and restaurants9000127500.71 Electricity, gas and water supply12917163840.79 Construction8750162500.54 Leather, shoes industry8250154170.54 Plastic Manufacturing industry9083283340.32 Paper Industry7667164160.47 Chemical Industry9083283340.32 Metal manufacturing industry10417242500.43 Mining Industry8917274170.33 Telecommunication9000359170.25 Wholesale trade8917157500.57 National average9400186800.50

25. 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,

26. 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

27. 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

28. 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.