The private sector is not following the state, it pays 20% lower wages

2024-06-13 07:15:49, Ekonomi CNA

The private sector is not following the state, it pays 20% lower wages

Illustrative photo, taken from Google

Pressures in the labor market have increased significantly in recent years. The lack of manpower has forced businesses, but also the public sector, to apply wage increases as a way to keep jobs.

A government initiative to bring the average salary in the public sector to 900 euros next year was intended, among other things, to increase competition in the private sector. Despite the fact that salaries in the private sector have increased in recent years, they have not been able to follow the pace of growth in the public sector.

The difference between the average salary in the private and public sectors widened further in the first quarter of the year, reaching -19.1% from -16.7% in the first quarter of last year.

The average gross monthly salary in the public sector reached 84,979 ALL in the first quarter of 2024. Its level was 11,774 ALL higher than the same period last year, or 16% more.

Source: INSTAT

While the average salary in the private sector reached ALL 68,686 in the first quarter, or ALL 7,743 more than January-March 2023 with an increase of 12.7%.

The government started applying a strategy for salary increases last year, where the beneficiaries were mainly public administration and senior officials, while for the education and health sectors, the increase will be applied this year.

Salaries in the vital sectors of public administration, education, health and police were indexed to inflation last year by only 7%, while the increase in the average salary in the public sector is justified by the doubling of salaries in the high levels of public administration.

The private sector, on the other hand, suffers from high levels of informality, as many businesses still do not declare the real number of employees and their salaries.

Source: INSTAT

Informality in the Albanian labor market is widespread, but most of it is concentrated among low-wage workers, while 20% of the phenomenon is dominated by those who receive high wages, - notes an OECD research (Organization for Cooperation and Economic Development).

The OECD has defined low wages up to 50% of the average wage level, average wages are from 50% of the average to 150% of the average; and high salaries with over 150% of the average salary).

In Albania, informality in the labor market is concentrated 60% in low wages, 20% in average wages and 20% in high wages./ Monitor.al