Investment Council – Moving from low wages discussion to more labour productivity for a sustainable growth

Tirana, 18 April 2023 / The Investment Council (IC), led by the Minister of Finance and Economy, Ms Delina Ibrahimaj, held a meeting to discuss main entrepreneurs’ challenges on the subject “From Low Wages to Productivity at Work.” The meeting focused on gathering insights from the business community on the recently implemented minimum wage increase, effective from 1st April 2023, and the potential increase in cost for the business. The main objective was to improve the efficiency of common interventions in support of specific sectors and reshape the focus and attention of the public debate from low wages to labour productivity. The meeting was attended by all IC members and around twenty observers representing the public and private sector and development agencies.

In her address, Minister Ibrahimaj explained that the government’s decision to increase the minimum wage was previously consulted with selected (most impacted) business sector representatives through other formats, while it was not meant to burden businesses with additional costs. Rather, it was taken with the purpose of establishing a sustainable economic future, which includes three goals: increasing productivity, promoting higher salaries across all levels, and reducing informality. This effort will remain an ongoing process, as the government plans to gradually raise the minimum wage to 45,000 lek by 2025. The Minister encouraged especially larger businesses to prioritize the development and upskilling of human resources in conjunction with the wage increase while she announced the government’s plans for potential wage indexes. 

The Secretariat briefly presented the findings of a study based on prior desk research and an online survey conducted with 506 companies focused on the impact of the recent wage increase on productivity, employee motivation, market competitiveness, and entrepreneurs’ perspectives on the potential wage increase.

During the open discussion session, business representatives (The Union of Traders, Chamber of Commerce of Tirana, Business Diaspora Chamber, AmCham, DIHA, Woman Economic Chamber, Union of Chambers of Commerce, Proeksport Albania, and KASH) shared their views, including valuable concerns and suggestions on how to better streamline the wage increase process. While in principle supporting the initiative, they stressed the crucial importance of cooperation and support on the quality of education and upskilling, availability of the workforce, especially professional level, improvement of staff welfare, upgrading the quality of the public administration response, and ensuring prior consultation of such measures. They also highlighted the need to upgrade efforts on informality, ensure more tax predictability, more financial support to woman’s entrepreneurs, and possibly introduce more flexibility in the labour code. The meeting concluded with the understanding that sustainable economic growth requires sustained collaboration and support from all stakeholders and will be followed up with specific technical working groups in areas such as productivity, upgrade of the quality of education and skills, and more information on employees’ rights and obligations.

*****

Full materials of this meeting will be published in the next few weeks in our dedicated section https://ww.investment.com.al/ic-meetings/.