Who will work?/The population over 65 will be as much as 80% of the labor force in 2070

2024-02-02 07:37:00, Ekonomi CNA

Who will work?/The population over 65 will be as much as 80% of the labor force

Albania will find it very difficult in the coming years to offer a dignified life for pensioners.

First, the majority of those currently working do not pay insurance and second, the rapid aging of the population is increasing the dependency of the elderly (this report expresses the +65 population as a percentage of the labor force aged 15-65).

In 2023, Albania had the over-65 age group as 25% of the labor force (15-65 years), at comparable regional levels. But unfavorable demographic developments will mean that in 2070 the +65 age group will be as much as 80% of the labor force (15-65 years old), the International Monetary Fund estimates in the last review of the agreement with Albania.

The dependency of the elderly in Albania in the 2070s will be at the highest regional levels (see the graph below). This means that in the coming decades the working-age population will equalize with pensioners. But the real developments of the population, which in the last decade have gone worse than the projections, make the developments even sadder.

Last year, the average pension in the country reached 19,000 ALL (about $200) per month. Those in the lowest decile receive an average of 8,500 ALL per month and those in the highest decile 38,000 ALL. While the social pension that is received at the age of 70 by those who have not paid insurance reached 8,588 ALL in 2022, which is approximately a quarter of the minimum wage.

The International Monetary Fund points out that in the future it is likely that more people in the future will receive only partial pensions, social pensions due to the insufficient duration of the contribution.

This combined with the declining replacement rate may raise concerns about increased poverty in old age. While in 2012 people who retired contributed an average of 35 years, those who retired in 2022 contributed an average of 27 years.

The IMF advises the government to address the poor coverage of the working-age population with insurance. To achieve this, the Fund recommends incentives for adults of working age to pay insurance.

Also, pension benefits in the future should be well harmonized with contributions.

To curb the deterioration of old-age benefits, the Fund recommends facilitating voluntary pensions and private schemes, as in some countries they have encouraged people to pay for pension insurance./ Monitor Magazine