Labor productivity in Albania fell last year, remaining at the lowest level in the Western Balkans.
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According to data from the International Labour Organization (ILO), gross domestic product per hour worked in Albania was estimated at 18.7 international dollars last year.
This indicator contracted by 4.1% compared with 2024, and the gap with neighboring countries in the region widened further.
Labor productivity is usually measured as the ratio of the value of output to the time spent producing it. Comparative statistics use the international dollar as the unit of measurement, a hypothetical monetary unit used on the basis of purchasing power parity.
Among the countries in the region, Albania is preceded by Bosnia and Herzegovina, at 26.3 dollars per hour; Serbia, at 29.8 dollars; Montenegro, at 31.1 dollars; and North Macedonia, at 34 dollars.
ILO statistics provide no information on Kosovo.
Albania also ranks below the global average, which the ILO estimates at 23.3 dollars per hour worked.
The main factors determining productivity levels are investment in technology and automation, innovation, and the quality of human capital or the skills of the workforce.
However, the structure of the economy and the share of output generated by sectors that typically enable greater added value per unit of labor time also have a major impact on this indicator.
The countries with the highest labor productivity in the world are Ireland, at 164.7 dollars per hour, followed by Luxembourg, at 159.5 dollars per hour.
ILO data show that, in general, economies that rely on a lower-cost workforce also have weaker labor productivity.
In Albania, too, the low cost of labor and high informality have not created many incentives to increase productivity in the decades since the fall of communism.
Because of low wages, businesses have felt little pressure to invest in automation, which would make it possible to increase output without adding labor costs.
The declining share of the garment-processing sector in the economy and employment could provide an opportunity to redirect the economy toward sectors with higher productivity.
Low labor productivity limits opportunities for real wage growth, which is why improving this indicator is essential to increasing a country’s prosperity.
On the other hand, pressure from the labor market to raise wages, as has happened in Albania in recent years, could create greater pressure to increase labor productivity so that businesses can maintain their competitiveness.
Nevertheless, comparative ILO data show that our country has not achieved significant improvements in labor productivity. /Monitor
