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.Introduction 2.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 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 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

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

2.1.2 Participation according to sectors a. Agriculture 50.5 % b. Construction 6.6 % Participation according to ownership: a. Public sector b. Private sector non agricultural c. 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 area25.8 % Central area13.4 % Southern area13.6 % Tirana district7.6 %

2.3 The structure of unemployed c. Based on age: age comprise 57.1 % age > 45 comprise 26.6 % d. Based on education level: elementary school 53.3 % high school45.1 % university1.6 %

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 % and b. 29 % of them are job seeker without a profession c. Agriculture workers 20 %

2.6 The analyze of the flow in-out on the labour market for 2004 Unemployed ( ) Entering during Going out during The situation at the end of

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

3.1 In 2001 the minimum living standard was established lek per capita, or equal to 90 USD lek per employee, or about 150USD, 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 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 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: YearsInflationReal wage % % % % % % % %

3.4 The ratio between the minimum wage and average wage The minimum wage is increased more than the average wages, during the years , 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.

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 the disparities between sectors according to the ownership. (Look at the table / shih tabelen) the level wages differs between different sectors according to the economic activity. (Look at the table/ shih tabelen) The disparities of wages according to the regions.

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 Total

3.6.2 the level wages differs between different sectors according to the economic activity Economic branch Minimum wageAverage wageRatio min wage/ average wage Shipping Rail transport Roadway transport Fishing Manufacturing grocery industry Textile industry Hotels and restaurants Electricity, gas and water supply Construction Leather, shoes industry Plastic Manufacturing industry Paper Industry Chemical Industry Metal manufacturing industry Mining Industry Telecommunication Wholesale trade National average

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 families at the poverty level with incomes less than 2 USD per capita in day about 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.