Prime Minister Edi Rama’s remarks at National Employment Conference:
I would like to begin by expressing appreciation to Professor Anastas Angjeli and the group of members of the parliament, who joined a process of particular importance to us considering that employment and creating new jobs is a top government priority during this term in office. With their detailed report the group of lawmakers have provided a precious contribution to our efforts to identify main problems and recommend the government’s approach to these problems.
The report which is being handed over to the government by the group of MPs lead by Professor Anastas harmonizes our whole approach and provides a valuable contribution towards perfecting the strategy that outlines labour and employment growth policies for the period 2018-2021.
Over the past years, the country recorded an economic growth which slowed and stopped due to the financial crisis, as well as due to a internal crisis of state system which was about to collapse in terms of interaction. However, what the report has found is that even during the growth period prior to the financial crisis, employment failed to increase and economic growth without employment is actually not a typically Albanian, but a wider phenomenon.
Today we have received some very encouraging data, although I am always aware that when we talk about the economy and employment, figures assume say a relative importance to the people’s ears, because what it counts is the impact of the economic growth, the direct impact of employment on the people’s daily life.
Albania is the only country with the employment rate accelerated by 50 percent and the unemployment or jobless rate fell, I quote, to the lowest level of 13.6%.
On the other hand, it is also encouraging that – albeit far from being sufficient – Albania ranks as the country with lowest youth unemployment rate in the region. However, the 26 rate is not a low figure and that’s why UI would like to reemphasize that weight of such figures, although showing a progressively improving trend, it holds however true that the employment rate among population aged 15 to 64 years old stands at 58.2 percent in the last quarter of 2017, up from 43 percent it was in 2013. This is translated into a 15 per cent increase that constitutes no less, and no more but a solid basis to push on with a process of reforms and a process of further measures included in the detailed report drafted by the professor’s team.
However, having said these, a series of questions which require continued attention and increasingly more articulate answers still remain, since the truth is that many Albanians at a working age are yet to be actively integrated into the labour market. Many of them are still looking for a job, but developing their job-related skills and job-knowledge through vocational training remains a challenge. In addition to what was synthetically said and what the former Minister of Labour and Social Work, Blendi Klosi, said that there are jobs, but there are no professionals to meet the market needs, the truth is that this is the reality of all our confrontations with companies and all unsuccessful confrontations of people looking for a job with the companies.
Today there is no big Albanian company that doesn’t offer job opportunities and when I say big company I don’t mean the country’s ten largest companies, but all large business enterprises.
All companies across the country offer job vacancies. The main problem the companies are increasingly encountering is finding people who possess specific skills and knowledge to take up these available jobs and meet the labour market needs. There could be no immediate, but a long term solution in this regard and this problem can be addressed through strengthening the vocational education system.
Should the vocation education reform was carried out 20 years ago we would have had a completely different situation today. However, the past remains a past and we can’t change the inherited legacy. The truth is that the rebirth of the country’s vocational education system and fast growing number of students attending vocational training and education have started yielding initial results in the country’s employment system and labour market, as in the end it is the enterprises the one to create new jobs, and not the government.
The government has the irreplaceable responsibility to support creation of new jobs by ensuring an environment that provides support to entrepreneurship not only in fiscal terms and in terms of the entire bureaucracy chain, but also makes available human resources with talented and skilled individuals to enter and develop career in the labour market and fill the vacancies.
The progress of reforms has produced results in this respect and deepening reform efforts is the only way to increase these results by supporting all interventions in all sectors.
We believe that these reforms will lead to a significant growth in employment figures during the period 2018-2021 thanks to an already developed program aimed at a larger economic growth with higher real employment rate starting from infrastructure with a series of major infrastructure projects due to be implemented over the next three years under the largest financial package ever provided for infrastructure during a government’s term in office; tourism industry that is increasingly becoming a major engine of our country’s economic development; the manufacture that is showing encouraging signs of switching from a closed cycle to another stage of development, which means the entire process carried out within the country, just like we are also witnessing a growing interest from various leading companies to take advantage of Albania’s investment potential and its labour force for more sophisticated processes. The most obvious example is German company Forschner, which, after successfully opening its enterprises and factories to develop and manufacture spare parts for the Mercedes and automotive industry in general has most recently applied for construction of a new factory which will employ more than 1200 people and will carry out processes that require skilled labour force.
Increasing funding to support projects on agriculture development and inclusion of Albania’s agriculture under the EU Funds for agriculture will allow for a lot more breathing in supporting all these processes and all individuals who will submit the required projects on rural and agricultural development.
The challenge we are all committed to – I repeat – is to stimulate professional and vocational training, not just in terms of education, where figures clearly speak for themselves and it is enough to point out that those who attend vocational education statistically stand 20 percent higher employment opportunities compared to university graduates, and 35 percent higher than those who complete secondary education only.
A new program is also underway under which paid training jobs and courses are being made available even to older people who are removed from the social economic assistance scheme and financial support is offered to any unemployed individual and jobseeker who can’t find a job because of lack of the required skills and is willing to attend a professional course. In such case, the employment promotion program includes a higher payment than the economic assistance benefit for anyone attending a one, two or three-month vocational training program in order to develop the right skills and knowledge and fill the vacancies at various private companies.
The report includes a series of other recommendations on taxation. The report confirms fairness and the usefulness of fair and progressive taxation, but it suggests a number of measures regarding taxation on small business and the expansion of the VAT scheme.
I am very pleased to publicly state that after making all required calculations we have decided to make an important historical step towards a significant tax relief to small businesses, by cutting the profit tax rate on all businesses exceeding a threshold of annual turnover of 8 million lek and which are currently levied a tax rate ranging from five to 15 percent. The government has decided to increase the annual turnover threshold to 14 million lek, which means that all businesses with an annual turnover of 14 million lek will pay a five percent profit tax, meaning that the tax rate has been cut from 15 to five percent only, relieving more than 10 thousand businesses which are currently part of the big business system, or that could be part of the big business due to their inclusion in the 20 per cent Value Added Tax system.
What we said from the outset is clearly proved today. Expanding the VAT base was not aimed at mounting pressure on small business, but to prevent the big enterprises from exploiting the small business to avoid taxes. I am confident the move to lower the tax rate will be welcomed by the business community and it will hopefully promote employment by this business section in Albania which provides important self-employment and employment opportunities.
The report includes another recommendation on further digitization of the taxpayers’ service. The current taxpayers’ service is significantly expanding and it has helped to reduce a large share of the bureaucracy burden, paperwork and tax administration contacts for all individuals doing business in Albania.
Strengthening the National Employment Service is also another important recommendation, including the service’s restructuring and the working methodology. The National Employment Service has already ushered in a new stage. Later we will provide data on the employment figures through the employment service only without taking into account the number of the newly employed people by the private companies themselves.
It is absolutely encouraging that by changing the methodology and after an internal restructuring of the National Employment Service and with a proactive engagement of the entire office system in March, April, May, we have exceeded the threshold of hiring more than 10,000 people over the past three months and we are very optimistic about achieve the seemingly impossible objective to provide job placement for 25,000 new employees through employment service offices until end of 2018.
One of the issues remaining to be solved, as the report notes, is the often lacking contractual relation between the employers and employees, the necessity for a further hike in low salaries and the need to further formalize the pay system as I would like to emphasize – any idea or advise in this respect would be highly welcomed – because Albania’s formal pay system suffers from the informal payments. Suffice it to tell you that 41% of monthly wages declared by the big business operators average 30 000 lek. This is a lie. It is a lie to say that an economist, an accountant, an engineer, or other professions within companies are paid 30,000 ALL. This is impossible not only because it is illogical, but also because the data tell a completely different story. The truth is that a part of the salary is done in cash wage payments to avoid paying taxes, because no income tax is applied on wages up to 30,000 ALL in Albania.
We are focused and working on that. The Ministry of Finance and Economy has already launched a process to combat this phenomenon. The economy has been formalized in general. Today, Albania has a much higher employment rate compared with the 2013 employment figures and it is a result of both new jobs created in the economy and massive formalization of the economy. However, we face another challenge because the number of unregistered employees is lowering, but the number of the registered ones, but who receive cash payments, is still higher.
Concluding, I would like to express gratitude to the GIZ representatives for the German government and GIZ contribution as part of the economic cooperation between Albania and Germany.
Thank you very much!
