Albanians work hard and earn little: Towards the end of Europe on the economic value of work

2025-07-22 07:31:00, Ekonomi CNA

Albanians work hard and earn little: Towards the end of Europe on the economic

Being rich isn't just about having a high income. Prices vary from place to place, and a modest salary may be worth more where the cost of living is lower.

Even working hours are not the same: in some countries, higher incomes are achieved with fewer working hours, leaving more time for leisure and personal life. The Economist magazine ranked 178 countries based on three indicators.

The first is Gross Domestic Product per capita at market exchange rates. This is a simple, understandable, and widely used indicator. But it does not take into account price differences between countries.

The second indicator adjusts income for the local cost of living (known as purchasing power parity, or PPP). This gives a more accurate picture of living standards, but it does not take into account leisure time: labor market participation and the length of working hours vary from country to country.

The last indicator combines both aspects: local prices and working hours, thus providing a more complete measure of real well-being.

The ranking also includes Albania and other Western Balkan countries, excluding Kosovo.

In terms of per capita income, with $10,000, Albania lags behind both Bosnia and Herzegovina (almost $9,000) and North Macedonia ($9.3 thousand), while Montenegro and Serbia have $13 and $13.5 thousand per capita income per year, respectively. Albania is eighth in all of Europe in the ranking of countries with the lowest per capita income, leaving behind Azerbaijan, Moldova, Belarus, Armenia, Bosnia and Herzegovina, Georgia, and North Macedonia.

But when we move on to the other two indicators, which take into account both price differences (which adjusts income for changes in the cost of living in different countries) and the last indicator that calculates income based on prices and hours worked (it shows how much wealth is actually generated per hour worked in each country.

This is the most accurate indicator to compare the economic efficiency of the working population), relative incomes decrease, reflecting expensive prices, while working hours are long. Albanians have the lowest incomes in the region, compared to purchasing power, after Bosnia and Herzegovina, and are fourth in Europe, after Moldova, Bosnia and Herzegovina and Armenia.

Adjusted earnings for prices and hours worked in Albania in 2024 were $26.4 thousand, compared to $22 thousand in Bosnia and Herzegovina. The data clearly shows that Albanians are among the workers who, despite working long hours, are the least well-paid.

While in North Macedonia this figure reaches over 30 thousand dollars, in Serbia 31.6 thousand and in Montenegro over 36 thousand, Albania lags far behind in the economic value it produces for each hour of work.

Even Bosnia and Herzegovina, with a lower nominal GDP per capita, manages to have a productivity comparable to Albania when it comes to effective labor income.

This weak positioning is not related to the low number of working hours - on the contrary, Albanians work a record 43.7 hours per week, compared to the European average of 36.1 hours - but to the structure of the labor market and the nature of the Albanian economy.

Most of the work is carried out in low-value-added sectors – such as informal agriculture, small trade or non-productive services – which do not generate sufficient income compared to the time invested.

Compared to European Union countries, the gap is even wider. According to The Economist, countries like Switzerland and Ireland manage to generate over $90,000 per capita per year adjusted for working hours.

Even countries with more structured economies like Germany, Austria, or Sweden fluctuate in the $70,000–$80,000 range. Albania, with just over $26,000, remains far from this standard.

The Economist's analysis sends a clear message to developing countries like Albania: productivity growth does not come just from more work, but from more efficient, better-paid work in higher-technology, higher-value-added sectors.

In the absence of structural reforms in education, employment, and technology, Albania risks remaining a country where hard work is required but economic rewards remain modest./ Monitor Magazine