Institutional Readiness Matrix: Albania in the Human Capital Risk Zone

From the lack of skills to institutional inability to produce and retain them.

The debate on the shortage of labor in Albania often stops at a simple question: Does the country have people with the skills that the economy requires?

But this question is only half of the problem.

The more important question is: Is the Albanian institutional system capable of producing, certifying, connecting with business, rewarding and retaining these skills?

This is precisely where the perspective changes.

The shortage of industrial electricians, certified welders, maintenance technicians, CNC operators, mechanics, HVAC technicians, photovoltaic installers or qualified tourism professionals is no longer only a labor market problem. It is a symptom of an institutional mismatch between education, business, fiscal policy, certification and emigration.

If an economy fails to create and retain the people it needs, then the problem cannot be solved simply by increasing the number of students, opening new study programs or subsidizing individual training programs.

A system is needed.

For this reason, ALTAX proposes an Institutional Readiness Matrix, which compares Albania with Kosovo, North Macedonia and Serbia across six dimensions of the skills ecosystem.

Three main findings

1. Albania and Kosovo form the group with the lowest institutional readiness.

Albania is rated at 3.8/10, while Kosovo is rated at 4.1/10. On the other hand, North Macedonia reaches 6.2/10 and Serbia 6.8/10.

This does not mean that the first two countries have solved the skills problem. It means that they have built relatively more functional mechanisms for linking education with the economy and for using human capital.

2. Talent retention is the weakest and at the same time the most strategic point.

In Albania, this dimension is rated at only 2.5/10, while in Kosovo it is 2.0/10. Serbia reaches 6.0 and North Macedonia 5.0.

This shifts the debate from the question “how much do we invest in education?” to the much more difficult question: what happens to the individual after education has equipped them with skills?

If they leave, the educational investment does not disappear, but its economic value is realized in another economy.

3. ALTAX Skills Readiness Index places Albania at 3.4/10.

This result classifies Albania in the high-risk zone for labor market readiness in addressing the skills gap.

The difference between the institutional matrix score of 3.8/10 and the synthetic index score of 3.4/10 is not a contradiction. The matrix measures institutional capacity across six dimensions, while the new index focuses more directly on the ability of the Albanian market to address the concrete skills gap.

Albania remains behind in the institutional architecture of skills

Comparative Institutional Readiness Matrix

Dimension	Albania	Kosovo	North Macedonia	Serbia
Educational quality (1–10)	5.5	5.0	6.5	7.0
Education–business linkage (1–10)	4.0	4.5	7.0	7.5
EQF international certification (1–10)	3.5	5.5	6.5	6.5
Fiscal incentives (1–10)	3.0	3.5	5.5	7.0
Talent retention (1–10)	2.5	2.0	5.0	6.0
Curriculum updating (1–10)	4.5	4.0	6.5	6.5
Average	3.8/10	4.1/10	6.2/10	6.8/10
Reform priority	HIGH	HIGH	MEDIUM	LOW

Source: Synthetic editorial assessments based on indicators and sources from ETF, ILO and RCC Balkan Barometer 2025. The values do not constitute an official assessment of the institutions.

The matrix creates a clear division among the four economies.

Albania and Kosovo are in a group with low institutional capacities, while North Macedonia and Serbia have built a more consolidated architecture.

The difference is not related only to the level of education. In fact, the educational quality dimension is among those where the gap is more limited. The differences become much more visible when we move from the production of knowledge to its economic use.

This is the essence of the Albanian problem.

1. Educational quality is not enough

Albania is rated at 5.5/10 for educational quality, ahead of Kosovo at 5.0, but behind North Macedonia at 6.5 and Serbia at 7.0.

At first glance, this result may appear to be the main problem. But the matrix shows the opposite.

If Albania had only an educational quality problem, then improving education should automatically lead to an improvement in the labor market.

This is not happening.

Because the economy does not require only knowledge. It requires applicable skills, certifications, experience, technical standards and adaptation to technology.

Therefore, the system may produce an individual with relatively good education, but not necessarily a professional whom a business can immediately place in a productive position.

This is the difference between education as an input and skills as an economic output.

2. The education–business linkage is one of the largest deficits

Here the difference becomes much clearer.

Country	Education–business linkage
Albania	4.0/10
Kosovo	4.5/10
North Macedonia	7.0/10
Serbia	7.5/10

Albania is around 3.5 points below Serbia and 3 points below North Macedonia.

This is an institutional difference, not merely a statistical one.

In a functional skills system, business should not wait for education to produce the people it needs. It should be part of the process of producing them.

This implies:

• real professional internships;
• cooperation with companies;
• dual programs;
• curricula determined jointly with industry;
• workplace training;
• internationally recognized certifications;
• mechanisms for co-financing vocational training.

In Albania, these mechanisms exist in different forms, but the problem lies in the scale, coherence and connection with real demand.

This explains why businesses report a shortage of professionals even when part of the education system continues to produce graduates.

3. Certification, a skill that is not transferable remains partially closed

In the dimension of international certification and alignment with the EQF, Albania is rated at 3.5/10, while Kosovo is at 5.5 and North Macedonia and Serbia at 6.5.

This dimension is particularly important for a small and open economy.

An electrician, welder, maintenance technician or CNC operator should not only have the ability to perform a job. They should also have a recognizable standard of that skill.

The greater the transferability of certification, the easier it becomes for:

• the employer to assess the skill;
• the worker to move between companies;
• the profession to be recognized in European markets;
• training to be transformed into economic capital.

This is also a critical issue for emigration.

Ironically, a weak certification system can create a paradox: Albania invests in the formation of the individual, but fails to give them a complete transferable standard of skill.

4. Fiscal incentives, the state still does not sufficiently treat skills as an investment

Albania receives only 3.0/10 in the fiscal incentives dimension.

Serbia reaches 7.0, while North Macedonia reaches 5.5.

The difference shows that fiscal policy can be used not only to collect revenue, but also to direct private investment toward human capital.

A company that finances employee training, technical certification, professional internships or reskilling should have an economic reason to do so.

If the cost of training remains entirely with the business, while the benefit may be transferred to a competitor or to another economy through emigration, the business will invest less than the level the economy needs.

This is a form of human capital market failure.

For this reason, fiscal incentives should not be seen as a favor to business. They can be an instrument for correcting a private investment that otherwise remains below the optimal level for the economy.

5. Talent retention, the point where Albania loses the most

This is the most concerning finding of the matrix.

Country	Talent retention
Albania	2.5/10
Kosovo	2.0/10
North Macedonia	5.0/10
Serbia	6.0/10

In Albania, this is the lowest result among the six dimensions.

And this changes the entire way in which education policy should be read.

If a country invests in educating a young person, but they leave immediately after acquiring marketable skills, then the cost of education is socialized in Albania, while a large part of the productivity is realized outside it.

In this sense, emigration is not only a demographic phenomenon.

It is also a transfer of human capital.

And the more specialized the individual becomes, the greater the potential value of this transfer.

Therefore, it is not enough to say that Albania should invest more in vocational education.

The question must also be answered:

What makes a qualified professional stay in Albania?

If the answer is only “better education”, the policy is incomplete.

It must include competitive wages, higher productivity, professional career, working conditions, certification, opportunities for entrepreneurship and a long-term perspective.

6. The curriculum is changing, but the economy is changing faster

In curriculum updating, Albania receives 4.5/10.

It is better than Kosovo with 4.0, but significantly behind North Macedonia and Serbia, both with 6.5.

The problem is not only whether a curriculum has been changed, but whether it has been changed quickly enough to follow the technological change of the economy.

Today the Albanian market is demanding skills that a few years ago were peripheral:

• photovoltaic installations;
• industrial automation;
• electronic maintenance;
• smart building systems;
• CNC and robotics;
• HVAC;
• energy technologies;
• maintenance of modern equipment.

This means that the cycle of education reform needs to be faster than the traditional administrative cycle.

If the economy changes every two or three years, while the curriculum changes at the pace of institutional procedures, the gap will widen even when the reform is formally underway.

Part of the expanded analysis by ALTAX “The Absurdity of Skills and the Polarization of Wages”