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Ekonomia

The real salary in the country grew less than in 2021, depreciation from high inflation! What do the experts warn?

The real salary in the country grew less than in 2021, depreciation from high

All sectors of the economy under pressure from a shortage of workers and high living costs grew gross wages last year at double-digit rates.

But the unprecedented change in prices with an average of 6.7 percent made the real wage increase lower than in 2021.

According to INSTAT data, the average monthly gross salary reached 66,015 ALL at the end of 2022 with a 10.8 percent increase compared to 2021. But the real salary that takes into account indexation with inflation increased by only 4.1 percent, a pace this lower than in 2021 when the real wage in the economy increased by 6.4%.

As can be seen from the chart below, nominal wages and real money have grown at similar rates throughout the decade, but in 2022, it can be seen that nominal wages have grown strongly by 10.4%, but real wages have increased by only 4.1 percent as result of high inflation.

Wage growth has been undermined by strong price appreciation, a phenomenon that is also operating this year.

From 2014 to 2022, the average salary in the country has increased by 45%, reaching about 66 thousand ALL. The Prime Minister, Edi Rama announced earlier in the week that the average salary in the country in two years will reach 900 euros (102 thousand ALL) or 54% more than the end of last year.

Economic experts and businesses claim that raising wages without improving productivity and reorienting the economy to a model that produces higher-value goods is likely to backfire.

For example, the initiative of the country's prime minister to increase the average salary by 54% in just two years, results that have not been produced even in a decade, without relying on the structural improvements of the economy, risks creating a spiral of inflation, wages.

The Bank of Albania announced that the salary increase last year exerted pressure on prices.

“Në veçanti, paga mesatare në sektorin privat u zgjerua me rreth 14% në terma vjetorë gjatë tremujorit të fundit të vitit të shkuar. Kjo rritje ka mbështetur zgjerimin e të ardhurave të disponueshme të familjeve shqiptare, ka ushqyer zgjerimin e konsumit familjar si dhe ka ndihmuar qëndrueshmërinë e rritjes ekonomike. Megjithatë, nga ana tjetër, ajo ka rritur kostot e prodhimit të biznesit dhe ka lehtësuar përcjelljen e rritjes së çmimeve nga tregjet e huaja në ekonominë vendase” tha Guvernatori i Bankës së Shqipërisë Genti Sejko në Konferencën për median, pas vendimit për rritjen e normës së interesit me 23 mars.

Wage growth was anemic in the last decade, in fact from the crisis of 2008 until 2020. Low wages continue to be the basis of the Albanian economic model, so their increase without leading the production cycle to a higher value it risks producing inflation rather than profits for employees. /Monitor