Labor Market Indicators in Albania – Q4 2024

According to official data on the labor market for the fourth quarter of 2024, several important signals emerge regarding the economy and employment policies in Albania.

Below, after a careful review and a comparative look at some statistics from neighboring countries, we present several key comments based on these statistics.

1. Employment trends show improvement, but not stability

The employment rate for the 15–64 age group in Q4 2024 stood at 68.3%, marking a year-on-year increase of 1.6 percentage points. However, compared to Q3, employment declined by 0.8 percentage points. This fluctuation suggests a positive annual trend but a lack of quarterly stability, raising questions about seasonal or temporary factors influencing this pattern.

Compared to 2023, the industry sector recorded the largest growth (+3.6%), while agriculture and services saw modest increases. Nonetheless, all three sectors experienced a decline on a quarterly basis, indicating a general slowdown in the labor market. This points to an economy struggling to maintain a sustained growth in employment.

2. Unemployment Signals a Mixed Picture

The unemployment rate dropped to 8.8%, compared to the same quarter in 2023 (-0.8 percentage points), but increased compared to Q3 2024 (+0.7 percentage points). This shows that, despite annual improvements, the intra-year rise in unemployment raises concerns about the labor market’s stability.

A particularly concerning issue is youth unemployment (ages 15–29), which stands at 19.1%. Although this is 2.1 percentage points lower than the previous year, the quarterly increase of 1.4 percentage points indicates that young people continue to face persistent challenges in finding stable employment.

3. Labor force participation reveals gender gaps still burdening families and the economy

The labor force participation rate for the 15–64 age group is 75.5%, with a moderate annual increase (+1.2 percentage points) but a quarterly decline (-0.4 percentage points).

However, the gap between men (82.2%) and women (69.1%) remains significant, with a 13.1 percentage point difference. This reflects ongoing structural barriers faced by women in the labor market, whether due to lack of supportive policies or the influence of traditional gender roles.

4. The economically inactive population remains an underestimated issue in 2024

The share of the economically inactive population (ages 15–64) remains high and is influenced by several key factors:

• 17.8% are engaged in household duties.
• 10.6% are retired or on early retirement.
• 14.9% are permanently unable to work.

Another concerning element is the percentage of discouraged unemployed (4.1%), who have stopped looking for work because they believe no opportunities are available. This reflects a lack of confidence in the labor market and suggests that the economy is not creating enough attractive job opportunities.

Comparison with Regional Countries

In comparison with regional peers, Albania continues to have a lower unemployment rate than North Macedonia (~13%) and Bosnia and Herzegovina (~14%), but higher than Serbia (~7%). In terms of labor force participation, Albania is mid-ranked, but lags behind Montenegro and Serbia. However, the main issues that stand out for Albania are the high gender gap and high youth unemployment.

From the above, it is evident that:

• Unstable economic growth is being reflected in the labor market, where despite annual improvements, quarterly trends show significant fluctuations.
• The gender gap in employment and labor force participation remains problematic, necessitating targeted policies to promote women’s inclusion.
• Youth unemployment is a major challenge, and the market is not offering stable jobs for this category. Stronger linkages between education and the labor market are essential.
• Discouraged unemployment and the economically inactive population signal a need for deeper reforms in the labor market and increased investment in sectors with long-term employment potential.

While indicators suggest moderate improvements, the structure of Albania’s labor market remains problematic, requiring more focused interventions to ensure sustainable and inclusive employment growth.