Labour Market Situation in Albania.

The passage of Albania on the market economy at the beginning of 1990, like in many
other transition economies, experienced a substantial decline in labour force participation
rate in the new labour market.

In 1998, after the pyramid scheme crisis, the male participation rate was 85 % compared
to 55 per cent for women.

In 2000, less than two thirds of the working age population was active in the labour
market. During 2005, this indicator continue to be in decline.
The female participation rate during the year 2000 compared with the number of females
in working age has been about 55 %, during 2000-2005, the female participation rate has
declined. Actually, less than 50 % of women participate in the labour market.

Demographic and labour force indicators are as follows:

Demographic and labour force indicators in thousand:

1992 2000 2001 2002 2003 2004

Total population 3190 3401 3069 3069 3103 3135
Female 1600 1724 1539 1539 1556 1573
Working age population 1849 1939 1767 1767 1813 1863
Female 937 968 864 864 888 911
Total labour force 1489 1283 1101 1092 1089 1088.
Female 707 529 427 424 424 428
Labour force participation rate 80.5 66.2 62.3 61.8 60.1 58.4
Female 75.4 55 49 49 47.7 47.5
Source: INSTAT, MOLSA

The analyze of the data linked with the decline in participation rate can be explained by different
causes.
A considerable number of people are engaged in the informal sector. Others are
discouraged for a long time without job and out of the labour market. A lot of Albanian
people, mostly young men (some 600.000-800.000) are estimated as working abroad.
This decline is explained also by the large withdrawals of women from the labour market.

1. Employment developments.

Restructuring of the economy in the early 1990 led to a fall in employment in general and
substantially in a fall of the employment in the public sector.
In the public sector during 2002 were employed 186 000 people compared with 850
000 people that were employed in 1991.
Actually in 2005, in the public sector 176.731 people are employed. This decline of the
employment in the public sector, was mostly due to mass privatization of state owned
enterprises and was also result of the bankruptcy and closing of a lot of activities that
were not able to provide benefits.

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The industrial sector, particularly extraction of minerals, metallurgy, equipment,
chemicals industry, textiles and paper, was the most hit sectors. Only the service sector
experienced a slightly higher number of works. But this increase of employment in the
service sector concerns only men, since women engaged in this sector remained almost
constant in absolute number.

From 2002 to 2005 about 80 % of the total number of the employed is provided by the
private sector. All transition countries have experienced a big increase in private sector
activity after 1990. Albania, which had no private sector in 1990, by the 1994 had a
higher percentage of employment in this sector than other transition countries. Much of
this is due to the rapid privatization of the agricultural sector, process that has been
almost completed by the end of 1993.
The employment level in the public and private sector during the last 15 years is as
follows:

Employment by sector (public and private)

Year 1992 2000 2001 2002 2004
Total number of
employed 1,0
people 1'094'821 68,190 920,569 920,144 931.068
a) Public Sector- 614'607 191,166 188,965 186,065 176.731
-Budgetary - 122,298 120,114 118,162 130.150
-Non Budgetary - 68,868 68,851 67,903 46.581
b) Private Sector
60'000 116,024 205,267 207,742 213.000
Non agriculture
c) Agriculture Private
420'214 761,000 526,337 526,337 542.337
Sector
Source: INSTAT, MOLSA

In the private sector the number of employed people continues to increase, compared
with the public sector. According to the data of the end of February 2005, in the non-
agriculture private sector, the number of employed is 213.000 people, and in the public
sector the number of the employed is 176.731 people ( public sector included budgetary
and non budgetary sector).

The number of the employed in the agriculture private sector and in the non agriculture
private sector, calculated together reach at 754.337 people employed. That means that
the private sector employee 81 % of the total number of employed compared with 19 %
employed by public sector.

The number of the employed in the agriculture private sector continue to be very high in
Albania. About 60 % of the total number of employed in both private and public sector,
are employed in this sector.

According to the economic activity, the labour force in Albania is employed in the
following sectors like a)-agriculture, forestry, fishery,b)-manufacturing industry, c)-trade
d)-construction, e) education, f) health etc. Speaking on percentage, in the agriculture,

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forestry and fishery are employed 57.7 %, in manufacturing industry 7.3%, in trade and
about 7 %, in construction about 6 %, in education 5.3%, in health 3% etc.
Speaking in figures, the employment according to the economic activity (excepted
agriculture sector) is as follows : Manufacturing industry 66.524 employed, trade and
repairing of cars 62.320 employed, public administration 52.531 employed,
construction 40.766 employed, education 37.560 employed, health and social activities
27.373 people employed, personal and collective social services 26.413 people employed,
transport and telecommunication 19.028 people employed, electricity, water supply and
production 17.591 people employed, hotels and restaurants 9823 people employed etc.

This demonstrates that apart of the construction industry, that is the most visibly
developed, there are other sectors that have employed and continue to employ a lot of
people. On the other side, we can see that at some other sectors like hotels, bars and
restaurants the number of people declared employed is very low. This low level of
employment in this sector as well as the others speaks for the high level of the informality
or black market.

The informal labour in some sectors mostly in construction, in confection sector, in hotels
and restaurants etc continue to be very high. The problem of the informal sector makes
unreliable the indicators of the employment and unemployment rate.

From the surveys and annual controls done by the State Labour Inspection at the formal
enterprises, results that the workers that works in black market go from 30 % in 2000 to
18-20% during 2004. In the construction sector, this indicator is more higher. If we add
to this situation the black activity of the informal enterprises not registered in the fiscal
administration, the percentage of the black market will be higher. For example, from the
controls done in the construction enterprises, results that from 2000-2004, the number of
informal enterprises that carry out activities in the construction sector go from 7-15 %.
The same situation results also in some service sectors like bars and restaurants etc.

2. Unemployment trends

The statistical data concerning the unemployment rate relates to registered unemployed in the
Employment Offices of the National Employment Service.
In Albania, up to now are not conducted complete and standardized surveys on labour force,
unemployment rate and labour market.
This situation makes difficult the real evaluation of the unemployment level and does not
reflect the real tensions of the labour market.

The high level of informal sector, the high level of migration of Albanian people from 1991, the
high rate of hidden unemployment in agriculture sector, and the high number of unemployed that
are not registered in the public employment service, constitute some of the factors that makes
difficult the real evaluation of the unemployment in the country.

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The unemployment rate at the end of 1992 was 26 per cent. The unemployment rate declined
significantly to around 12 per cent in 1996. This decline, however, was not matched by an
increase in formal employment.

After the 1997 crisis, unemployment was again in rise. Until 2002 the unemployment rate
reached at 16 per cent. Actually, according to the data of the end of February 2005, the
unemployment rate is 14.4 %.

Unemployment rate situation by sex, status and education at the end of February 2005, is
presented as follows:

Number of the unemployed registered by sex, status and education.

Year 1993 2000 2001 2002 2004

Total registered unemployed 301'289 215'085 180'513 172'385 157.008

Female- 75.150
141'001 101'919 85'420 81'326
Total unemployed with 10.467
106'783 21'894 14'322 11'184
unemployment benefits
Total long-term 103.563
unemployment 194'506 192'724 165'656 160'466

Unemployment registered : 84.100

156'892 104'604 89'309 87'297
-With primary education.
-With secondary education 70.165
136'685 104'615 87'097 82'267
-With university education 2743.
7'712 5'866 4'107 2'821
Source: INSTAT, MOLSA

Analyzing the data results that :

Women continue to constitute about 49.9 % of the total registered unemployment;

Long-term unemployment constitute about 66 % of the total registered
unemployment in the public employment offices;
In 2005, the long-term unemployed continue to constitute the most higher rate of
the total unemployment;
The majority of the long-term unemployment is made up by men, while women
occupied only 47.6%;

From the analysis of the unemployment according to the level of education results that:

The people with primary education constitute about 84.100 or 53.6 % of the total
number of unemployed registered in the public employment offices.

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 The number of registered unemployment with secondary education is about
70.165 or 44.7% of the total number of jobseekers registered at EO.

The majority of the long-term unemployment is part of the two above mentioned
categories.

The actual situation of the unemployment, linked with the level of education of the jobseekers
registered in the employment offices, affirms that training and retraining of the new jobseekers
that are waiting to find a job according the needs of the labour market , according the age and the
gender constitute the most important tasks that Vocational Education Training system has to face
in Albania.

The preference to be employed in some sectors and the level of wages in different sectors has
consequently had a lot of influence in the labour market functioning.

The most highly paid professions in both private and public sector are managers. However,
according to the survey, the average wage of a university-trained specialist in the private sector is
twice bigger than the wage of the same specialist working in the state sector. Health employees
have the highest level of wages in the private sector and double the wages of their counterparts in
the public sector.
The wages in the industry sector are higher than the wages in the agriculture sector. Inside the
industry sector, wages are higher in the construction sector than the confection sector , textile
sector, shoe-making sector etc.

In the public sector, the wage of the employees involved in the civil servants law is more
higher than the wage of the others sectors that are not involved in the civil servants law,
and more higher than the wage of the education and health sector.

3. Labour market regulations, institutions, taxes and barriers.

The labour market in Albania is regulated by the the law on employment promotion of 1995. This
law has been amended twice, at 1999 and 2002.

Based on the promotion employment law, the employers are obliged to declare ( to report) at the
employment offices the job vacancies 7 days from the opening of the new one.
At the same time, each employer every three month is obliged to report to the employment offices
the employees/workers list, been employed by her firm ( enterprise), giving information on
number of people employed, age, education level, vocational training, sex, etc.
Another obligation derived by the law, for the firms are that for every 24 employees/workers,
they have to employ a person with handicap.

The low define also sanction for the non-respect of the obligations. The labour state inspection is
the public authority that has to follow this matter.

The institutions that deal with the labour market are: Ministry of Labour and Social Affairs,
National Employment Service, social partners and other private actors like Private Employment
Agency, Private Vocational Training Centers etc.

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The 1995 law on Employment Promotion established national Employment Service (NES) and its
statute was defined in 1998 by a decision of the Council of Ministers.
NES has 12 Regional Employments Offices and 24 Local Employments Offices. NES mainly
covers urban/suburban areas while rural areas are out of its reach.
The services provided by NES include the following: registration of jobseekers, cash payment of
unemployment benefit, advice and counseling of the jobseekers, mediation, collection of
information on the labour market and implementation of the four employment promotion
programs.(1-The Employment Promotion Program for unemployed jobseekres.2- The
Employment Promotion Program for unemployed jobseekers through training in the job place 3-
The Employment Promotion Program through institutional formation.4- The Employment
Promotion Program for unemployed women).
Taking in mind the obligations of the law and the number of the vacancies declared at the
employment offices, results that a certain number of firms dont respect the rules of the law for
this reason the NES as partner of the business is working to implement a new strategy in relation
with the entrepreneurs, making action plan for visits to firms to explain them our services.

The employment services face a certain number of barriers:

High level of informal labor, influences the level of interest of job seekers
High level of taxes for employers and employees in the framework of social insurance
scheme. In order to support the business and the employees/workers, at 2002, the level of
taxes has decreased from 45.9% to 41.9 %.. In the same scheme, the taxes for
unemployment benefit have decreased from 6 % to 5 %. This diminution of taxes
expected to have outputs in increasing the number of people employed in the formal
sector and in reducing the employers and workers taxes.
The ratio between passive and active employment policies and programs, is an other
obstacle that should be improved in the future.
The lack of coordination in the implementation process of sectional strategies that
encourage the integration of groups in need such as: women, young people, Roma
community etc.
Passivity and expectations of some persons or groups in need, to profit from the social
support programs without been involved in the labour market.
Low educational level (53.6 % with eight-year school) of the job seekers registered in the
employment offices, which has brought difficulties in their employment.
The lack of specialized institutions within the field of vocational training which deal with
compilation of standards, training of the trainers, development curricula, the procedures
of licensing and accreditation, human resources as well as lack of necessary finance
resources could be considered as a barrier.
Lack of continuity of education and vocational training as well as further trainings after
graduating from school in order to be able to adapt and to be included in the labour
market
The domination of the theoretical aspects in the process of training of the unemployed
job seekers.

4. Measures undertaken to face the barriers and policies undertaken for

improving the Labour Market Performance.

In order to increase the labour market performance, the Albanian Government in January 2003,
approved the Strategy on employment and vocational training. This strategy has defined fields
and measures of priority for the development of employment, vocational training, through

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development and modernization of the employment services, human resources development,
improvement of the legal framework of the employment policy, developing of partnership
relations with others actors of Labour market, development of enterprises etc.

In application of these objectives during 2004, has begun the analysis of the demand and supply
of the labour market. With the support of CARDS project is done the study Demanded skills in
the labour market through a questionnaire realized in 621 enterprises placed in all the regions of
Albania. Through this study has been realized:
Qualified evaluation of the immediate needs for skills of the enterprises based in regional
level,
Evaluation of the local offer in order to guarantee training in the public and private sector,
identification of the profiles and professions that are difficult to satisfy, in order to
develop integrated strategy.
The survey has defined the most demanded professions-occupations of the labour market
that can serve to the prospect of the new courses in the Public Center of Vocational
Training.
The aim of this project is to support Four VET Centers in Tirana, Kora, Elbasan and
Shkodra Region.

Based on this strategy, up to 2007, it is aimed to provide employment for about 22 thousand
persons every year, through the active labour market policy, using the mediation of the public
employment offices, the employment promotion programs, through vocational training programs
and via the economic development of the regions.

4.1 Improvement of the system of vocational training and increasing the

efficiency of employment promotion programs.

Improvement of the public and private system of the vocational training is under process through:
Geographical distribution of vocational training network, especially in the area with social
and economic problems, under the Economic and Social Development
Increasing of the capacities in the existing Vocational Training Center through the autonomy
increasing and improvement of the certification system
Modernization of curricula and establishment of a system of standards, certification,
evaluation and assessment.
Elaboration of the Occupations list and standards at national level.
In order to achieve these goals, the Government has supported with funds the employment
promotion programs and the vocational training programs, as follows:

Employment promotion and Vocational Training Funds delivered by the government:

Year 1999 2000 2001 2002 2003 2004 2005

Employment Promotion Fund 300 550 400 310 150 200 100
( in million of leke)

Number of the employed with 7621 11773 5010 4030 2100 3400
this fund
Vocational Training Fund (in 30 33 38 69 70 79 71
million of leke)
Number of people trained

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 with this fund 4780 7277 7252 8558 8097 8500
Investment, (in million of leke):
a.Employment offices 109 110 155 37 14 1
b. Public Training Centers
- - - 49 58 85
Source: MOLSA

Actually, funds on Vocational Training System functioning are doubled compared with
funds of 2000. The last three years, investments are focused on establishing new
Vocational Training Centers and on modernization of existing Public Vocational Training
Centers.
The goal of investments has been focused on increasing access of public training in all
the regions of Albania. Another objective of the Vocational Training system in Albania is
to better respond to the needs of the Labour Market.

The support of Vocational Training with public funds and the infrastructure
modernization of Employment Offices and Vocational Training Centers has been
followed by the increase of the number of employed people and trained people according
to the needs of the labour market. Consequently in 2004, the number of people trained in
public vocational training centers has been doubled compared with 2000.

Another positive development during 2004, have been the investments done by the
government for the construction of two new Vocational Training Centers. The new
centers constructed in the region of Elbasan and Fier ( two of the biggest cities of
Albania) will provide courses for the jobseekers according to the needs of the labour
market.

The results expected by the construction of the two new VTC in Elbasan and Fier will
be : the increase of the trained jobseekers number and consequently the increase of the
employment and the satisfactory level of the vacancies job of private firms.

The courses provided by Vocational Training Centers intend the integration and
reintegration of the beneficiaries in the labour market.
These categories are treated with priority in PVTC : Jobseekers registered in the
employment offices, roma, trafficked women, etc.
Ministry of Labour and Social Affairs has elaborated a targeted policy for the above
mentioned categories, offering to them free training courses or training courses with
limited fees.

At the same time , Vocational Training intends to offer services to the employed people
that need training in order to be more appropriate with the change of the new labour
market.

4.2 Employment and promotion employment programs.

The fund for employment promotion programs for 2004 was 200 millions of leke. With
this amount 4 different promotion employment programs are applied. The total number

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of projects realized is 139, and consequently the number of employed people is 3385
jobseekers. The medium duration of the employment is about 7 month for each person.
The women constitute about 60 % of the total number of employed in all projects.
The fund is provided by the the government budget. The medium cost for each new job
created is 106351 leke.
For the first time during 2004, priorities on the fields and sectors for projects
implementations. Have been elaborated.
Those priorities are focused on long term unemployment, employment of specific groups
that are in need. For the first time programs for the promotion of employment of women
jobseekers were applied, giving the priorities of women trafficked, women with
disabilities, women divorced etc.

In order to improve the employment policy and promotion employment programs the
MOLSA is working for:

Improving the legislation and simplify the administrative procedures .

Increasing the transparency through public information and increasing the level of
monitoring for the projects.
Strengthening the relation with the business, chamber of commerce, social partners
and with other actors of the labour market.

4.3 Increasing employment through modernization of employment services.

Mediation is considered as one of the most important route for increasing employment. In
order to realize this mission, the modernization process of the public employment service
of Albania has begun.

Using mediations, Employment Offices employed during 2001, 5000 persons, in 2003
they have employed 7400 persons and in 2004 they have employed 8500 persons.
Mediations had as primary objective the employment of people sustained from the
programs of unemployment benefits and social assistance.
During 2004 were employed 19 % of beneficiaries of the programs mentioned above,
toward 7% during 2003.

From budget state fund from 2000-2004, has been improved the infrastructure of the
majority of Regional Employment Offices.
In the same time has begun also the improvement process of the quality of services.
In order to do this, National Employment Service of Albania has closer worked with the
ANPE of France, and the French experience has been implemented in the region of
Tirana, Durres, Korca and Shkodra.

From 2004 we are working with Swedish National Labour Market Board, to raise the
efficiency of employment services and to create the labor market information system
with the aim of better performance of services for the main clients, such as: unemployed
job seekers and business.

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With these improvements the employment services aim to guarantee the quality of
services and achieve the EU standards.

In order to overcome the barriers, has been done some improvement of regulations and
rules and is under process the review of the employment policy. The evaluation of the
employment policies as well as identification of the proper recommendations have been
done within the framework of the Stability Pact in cooperation with ILO and Council of
Europe, recommendations which are at the multidimensional level. These
recommendations are included in working plans and programs of MoLSA, like:

The amendment of the Law for Promoting of Employment, which creates the
necessary gaps for the integration of the unemployed people within the formal
economic market.
The improvement of the Law About the Labour Inspectorate, the increase of
cooperation level between structures of MoLSA system, Ministry of Finance and
other institutions with the aim of formalizing the Labour Market.
Supporting the Private Employment Agencies, promoting their activities,
cooperating with the public employment offices and exchange information related
to the job vacancies in the market.
Approving the draft by the Albanian Government for improving the lab our
market through the increase of collaboration with business and the social
partners.
The implementation of the Law About the education and vocational training.
The identification of the responsibilities for developing the training programs
between MoLSA and MoES. The responsibilities for the technical professional
education 3-4-5 years have been appointed to MOE meanwhile MOLSA will be
responsible for providing courses that are relatively short terms and medium
terms, less than three years. The geographical expansion of the vocational training
network especially in the areas of high unemployment rate.
The increase of the capacities within the existing centers of vocational training
through the expanse of the independency of the VET centers and improving the
certification system.
Curricula modernization, establishment of certification system and evaluation,
compilation of occupational list and their standards in national level, in
cooperation with international donors and projects like: CARDS, Project for
Adults Education in Albania and SWISS CONTACT, etc.
Improvement of managing and administration system of the public vocational
training centers, continuity with investments for the establishment of new centers
and providing cabinets with the necessary technology.
Integration of macroeconomic policies with employment and social
protection.
Employment can not derive only from macroeconomic policies, but primarily it is
a core issue of all economic and social policies, involving in this process social
partners and the ministries such as the Ministry of Labor and Social Affairs,
Ministry of Science and Education, Ministry of Economy, Ministry of Finance,

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 that are responsible for the implementation of social policies and programs
defined in the NSSED.
Development of human resources, to overcome the discrepancies between the
capacities on the labor market and lacks in the national system of education and
vocational training. Investments on the employment public sector and
vocational training should guarantee learning during the lifetime learning and the
participation of employers and the representative of trade unions in the process of
education and vocational training on all levels.
Changing form passive labor market policies in active ones, through training
and re-training of the groups that do not posses the required skills for certain jobs
dominating in the labor market. Identification of target groups, not only of them
being unemployed job seekers but even of those being employed but in risk of
losing their jobs.
Improving the quality of employment services according to the models and
standards already piloted, training of the employments offices staff especially in
the local level, offering individual services for the job seekers according to active
policies and specific programs and in a midterm perspective, extension of the
NES activity in the rural and mountain areas.
Strengthening social dialogue. Strengthening the tripartite bodies in all levels,
to participate in the process of approving and implementing legislation, to
improve their capacities reaching collective agreements, especially about the
wages and working conditions.
Improvements on the information system. Modernization of a sustainable
system for production and dissemination of official statistics, on regular basis, as
well as establishing of a complete database for Labour Market issues is another
instrument to increase the Labour market Performance.

May 2005

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