World Bank: Emigration and population aging are limiting Albania’s economic growth

Emigration, population aging and a shortage of workers with the skills businesses need continue to limit the country’s potential for economic growth.

Despite improvements over the past decade, the labor market is showing signs of weakening, while the participation of women and young people in employment remains one of the economy’s main challenges.

In its Poverty & Equity Brief, published on October 9, 2026, the World Bank notes that improvements in the labor market have been an important factor in reducing poverty, but the latest indicators signal a slowdown.

“Continued emigration, population aging and a mismatch between skills and market demand continue to constrain labor supply and productivity growth,” the report stresses.

In the first quarter of 2026, labor force participation among people aged 15–64 fell to 76.2%, down 0.5 percentage points from a year earlier.

The employment rate for the population over the age of 15 was 58%, down 0.3 percentage points year on year, while unemployment stood at 8.4%.

The problems are more pronounced for women and young people, who continue to have lower participation and employment rates than men of prime working age.

“Making better use of Albania’s human capital, particularly by increasing women’s participation in the labor market and expanding employment opportunities for young people, will be crucial to sustaining economic growth, accelerating poverty reduction and catching up with higher-income countries,” the World Bank says.

According to the institution, eliminating gender gaps in employment alone could generate an estimated 12% increase in gross domestic product per capita over the long term.

Despite these challenges, poverty in Albania is expected to continue declining in 2026, supported by economic growth and improvements in the labor market to date.

The World Bank estimates that the poverty rate fell from 25% in 2024 to 23.1% in 2025 and is projected to reach 21.6% this year.

The indicator is based on the international poverty line of $8.30 per person per day at 2021 purchasing power parity, which is used for upper-middle-income countries.

However, the institution clarifies that these are statistical estimates rather than direct measurements, as the most recent household survey used to measure poverty dates from 2018.

The report also highlights the large income gap relative to international standards of well-being.

“Albania continues to face a significant challenge in closing the income gap,” the World Bank stresses.

The prosperity gap indicator stood at 4.1 in 2018, meaning that average incomes would need to rise almost fourfold to reach the global prosperity standard of $28 per person per day. / Monitor