Distorted market/Elementary jobs with the highest wage growth, stagnant seniors

2024-09-15 21:40:00, Ekonomi CNA

Distorted market/Elementary jobs with the highest wage growth, stagnant seniors

Illustrative photo, taken from Google

Restrictions on the labor market for high-level professionals and increased supply for low-skilled occupations are distorting the wage market. The lack of unskilled labor force and the development of sectors that do not require qualified employees have equalized the salary of the technician with that of the engineer and of the cleaning workers with that of the economist.

The concentration of economic growth in only two sectors, tourism and construction, has narrowed the opportunities for high-level professionals and managers from other sectors, while increasing the supply for elementary occupations. For example, a waiter in hotel structures in coastal areas is unofficially paid from 800 to 1000 euros per month and a cleaner up to 700.

Also, a stable worker in a livestock farm in the area of ??Fier is paid up to 700 euros per month, while an economist in Tirana in the first year of work does not receive more than 500 euros per month.

Shortages in human resources, mainly for lower positions, have disrupted the salary reference systems that every company had and increased the need for flexibility in salary bidding. For example, in the past, a manufacturing company had clearly defined the salary level it would offer an engineer or an electrical technician.

The company fanatically maintained its salary system, but now it often happens that a middle technician can offer a salary almost or the same as the (junior) engineer, said Alma Sulçe, founder and manager of the company Albanian HR Solutions sh. pk, with 23 years of experience in the field of human resources.

Ms. Sulçe mentioned that many middle technical professions: such as hydraulics, electricians, mechanics, etc., work independently (self-employed), with work with flexible hours, can have a monthly income higher than the salaries of employees with higher education , who are employed full time.

According to official data from INSTAT, in the first quarter of 2024, the salary for elementary professions increased by 53% compared to the same period of 2019. Elementary professions are characterized by a high level of informality.

Source: INSTAT

Most of them are officially paid the minimum wage or entirely in the black, while the real salary for elementary professions varies from 50 thousand to 100 thousand net lek per month. Elementary occupations are related to jobs that are learned in a week and do not require experience, such as cleaning workers, construction and industrial workers.

Human resource experts claim that entry-level occupations find jobs faster than those with higher education and are likely to earn equal or higher wages.

And according to INSTAT, from the first quarter of 2024, the salaries of specialists with higher education reached 95 thousand gross lek per month, with a 38% increase from the same period a year ago. This category of employees, which is mostly represented by employees in education and health, does not work informally and has net benefits of around 700 euros per month, which is often at the same levels as a cleaning worker or a waiter.

While the labor market is expanding in wages and supply for entry-level occupations, this is not the case for top-level managers.

The market in Albania is offering flexibility in the job offer and salaries for employees with elementary professions, without many skills, while for CEOs and high-level managers there is a stagnation of the offer.

Erald Pashaj, Executive Director at EPPC Albania and Kosovo, one of the largest human resources companies, said that the job market for executives and senior managers is directly related to the entry of large operators into the market, which these times are missing. The demand for the recruitment of professionals currently has the construction sector and its chains that have encouraged the employment of engineers and technicians.

Salaries increase more for elementary professions

The 2023 Census data showed that the country's population is no more than 2.4 million of the officially recognized 2.73 million. The census found that the remaining population has also aged considerably. From 2011 to 2023, the average age of the population has reached 42.5 years, aging by 7 years.

Source: INSTAT

With few people available, the economy should be oriented towards sectors that foster technology and innovation, rather than branches that require free labor. But historically, the economy of our country has developed in sectors that do not require many skills.

Emigration and the aging of the population on the one hand and the development of tourism and construction on the other have further pushed the needs for employees with elementary professions.

INSTAT data for the first quarter of 2024 show that the annual salary increase for the public administration sector was about 15%, as a result of a plan launched last year, which unusually increased salaries for all levels of the administration.

Employees with elementary professions and those in construction also had increases at these levels, whose salaries increased by 14-15% in the first quarter compared to the same period of 2023.

From the private sector, the highest double-digit salary increases were also in the trade and services sector with about 15%, where the majority of employees are represented by salespeople in retail trade and hotel and restaurant workers, mainly waiters , bartenders and cleaners.

In contrast, wages of highly educated workers and professionals from the first quarter of 2023 to the first quarter of 2024 increased by 11-13%.

"The value" of the school drops

In 2014, the salary of specialists with higher education was 135% of the average salary, while in the first quarter of 2024, the salary of this category was 129% of the average salary. In 2014, the salary of elementary professions was 56% of the average salary, while in 2024 it was 65% of the average salary.

Elementary professions are characterized by high informality, as the real salary in many of them is currently at the level of the average salary of ALL 73,641 or 150% of it (construction workers).

A person with an elementary profession without a higher education currently has chances to be employed faster and with the same or higher salary than a person who has just graduated from the Faculty of Law, Philology or Arts.

After the pandemic, the tourism sector had an immediate demand for employees, so much so that businesses stamped on poles and everywhere on facades job offers that went up to 1000 euros for a cleaner in the summer season in hotels in the South. Housekeepers and cleaners are likely to be employed much more quickly and at higher wages than skilled workers

Erald Pashaj says that sometimes, finding a job for a professional becomes difficult, since you can be very good at the job you have done, but you are not yet ready for the specific requirements that the host company has. High level professionals, who have skills, do not find it easy to find work, the opposite happens if you go down the level, the easier it is to find work, he said.

Expert Sulçe says that many young people, even though they have completed their higher studies, find it difficult to find employment in their professions.

Such as it is difficult for those who have studied Chemistry, Law, Social Sciences, branches of the Faculty of Philology, etc. She said that a job seeker without higher education can find a job more easily if he is willing to work in jobs that do not require certain qualification or experience.

The number of vacancies for unqualified and qualified employees (without higher education) is considerable, mainly in the Service, Production, etc. sector. There are many shortages for trades such as middle technician, waiter, bartender, plumber, painter, master in construction, etc., she said.

These developments in the labor market come about because there has been a lack of connection between the education sector and the economic model and long-term economic development plans. The network of vocational secondary education is not very efficient and many people who have finished higher education work in professions such as cashier, accountant, etc.

Illustrative photo

The gravity of wages

Tourism and construction have become the engine of economic growth in recent years, presenting an immediate offer in the labor market for workers without much knowledge. Salaries starting from 700 euros for cleaners, 1000 euros for waiters and up to 3-5 thousand for cooks are attracting many young people to these professions.

Also, workers who install electrical lines, hydraulics, air conditioning systems are in high demand in construction companies. Construction and tourism have become centers of gravity in the labor market due to the high supply of work, absorbing many young people and workers in other sectors.

The SN teacher in the city of Lezha, after working for several years in a row in the area of ??Shengjin, left her profession during the summer months due to the higher income she secured from working in the hotel.

Higher wages in construction and tourism are attracting workers from other lower-wage sectors such as agriculture and the fashion sector. The government is also looking at increasing wages in tourism as a means of bringing back immigrants from Greece, who work for lower wages in neighboring countries.

The development of tourism has changed the structure of employment according to economic activity. According to INSTAT, in 2023, the agriculture sector contributed 32.3% of total employment, with an annual decrease of 1.7%. While the trade and services sector (tourism) contributed to 29.1% of total employment or 2 percentage points more than in 2023.

Sources from the market claim that an employee with elementary skills in the construction sector is paid from 5-10 thousand lek per day. Year after year, the increase in the need for employees in this sector in the capital has made the population in the villages of Tirana, which previously engaged in agriculture, be employed in the construction sector in Tirana.

Elementary professions most in demand, high levels in stagnation

Labor market experts claim that, for elementary professions, the demand for work has been high in our country, so much so that businesses are meeting part of the needs with foreign employees.

High youth immigration and declining births have created a gap in the labor market, as demand for workers has increased in all sectors.

The economy in Albania today has two engines of development, which are also reflected in employment.

Source: INSTAT

These are tourism and construction, says Erald Pashaj. It is also expected to continue the demand for employees of the information technology sector, but also for positions that must produce quality, such as managers and specialists for each function.

The market always needs more and more skilled and competent people, with more knowledge, etc., and therefore will offer competitive salaries for these levels.

But for executives and CEOs there is stagnation, as this category is entirely dependent on the entry of new operators with potential, mainly foreign investments that require skills.

"If a foreign company enters that is looking for 20 managers and senior leaders, it sets the whole market in motion", says Mr. Pashaj.

In the early 2000s, spaces for specialties of all levels were generated by the entry into our market of foreign banks, telecommunications companies and those in the oil exploration and extraction sector.

According to the data of the Bank of Albania, for the first quarter of the year, Foreign Direct Investments reached the value of 354 million euros, the highest historical level for this period of the year. Foreign investments have increased by 15.3% compared to the same period last year.

However, the growth of foreign investments is already clearly dominated by the reinvested profits of enterprises, while new capital injections are almost at a standstill, as about 23% of their total was in the purchase of real estate, which does not generate employment./ Monitor.al