Social analysis of Poverty and Well-Being in Albania, 2024

In Albania, nominal income growth and positive macroeconomic indicators have not automatically translated into improvements in citizens’ everyday lives.

Public policies, including increases in minimum wages, pensions, and social assistance, aim to protect the minimum living standard and reduce poverty, but reality presents a more complex picture.

Data from the Income and Living Standards Survey (alb. AANJ 2024) provide a direct overview of how these policies affect Albanian families and how many actually manage to benefit from them.

Social policies function as a “shield” against the risks of poverty, especially for families in need or those with dependent children.

However, the lack of necessary income indexation to inflation and the rise in basic food and energy prices has limited their effect.

A family with an average pension of 30,000 lek in Tirana, for example, could not cover more than half of the cost of the basic food basket in 2024. Meanwhile, a family with two adults and two children working only on minimum wages often faced income insufficiency for energy, transport, and educational services for the children.

Trends in poverty and material deprivation

According to AANJ 2024, the risk of being poor has statistically decreased slightly, from 19.8% to 19.2%. However, this improvement is uneven across age groups.

In the 0–17 age group, the risk fell from 27.5% to 26.6%. This indicates a modest effect of social policies on families with children, where family allowances and subsidies have partially reduced food and material deprivation. For example, a family with three children receiving additional financial support for school and energy can cover some basic expenses, but not all.

In the over-65 age group, the risk increased slightly, from 13.6% to 13.8%, showing that pensions are not keeping pace with food and energy inflation for the elderly living alone or in low-income households. A pensioner living on 27–32,000 lek per month often faces a difficult choice between energy and food.

Material and social deprivation, which shows how many individuals cannot afford at least 7 out of 13 basic categories (food, energy, education, healthcare, transport, etc.), fell from 35.9% to 32.8%.
However, this current level indicates that still one-third of the population lives with severe deprivation, mainly families in need who cannot cover basic expenses.

Thus, if we analyze a family with two adults and one child in Shkodër, which can receive the mother’s pension and the father’s minimum wage, but cannot cover energy expenses for winter, school books and materials for the child, and save for emergencies.

Even though there is a modest improvement compared to 2023, social policies and income growth still show a lack of capacity to cover the basic needs of families in need and to guarantee a minimum living standard. For the average citizen, this translates into insecurity regarding food, energy, and education, creating a reality where economic growth in figures is not felt in families’ pockets.

The impact of social benefits

AANJ 2024 data clearly show that pensions and family allowances play a decisive role in reducing the risk of poverty.

Without any social benefit, the risk of being poor would be 36.7%. This shows that over one-third of the population would face basic shortages in food, energy, education, and healthcare if no protective mechanisms existed.

Including only old-age pensions and family allowances, the risk falls to 22.7%. This reduction indicates that these social policies are effective in maintaining a minimum living standard, especially for the weakest families or those living alone, but only to that extent.

Social benefits are not just financial transactions but protective life mechanisms for the most vulnerable groups. Low-income families, such as pensioners, families with one adult and dependent children, or people without access to stable employment, rely mainly on these resources.

Without them, these families would face much higher risks of material and social deprivation, increasing pressure on basic consumption, health, and children’s educational opportunities.

A pensioner with 30,000 lek per month living alone in a large city can only cover about half of the basic energy and food expenses. With family support or additional pensions, he/she can cover essential expenses, avoiding total deprivation and the risk of deep poverty.

This shows that social policies translate directly into real protection of well-being, and any change in these mechanisms has an immediate effect on the lives of the weakest families.

Differences by family structure

AANJ 2024 data show that family structure has a clear impact on the risk of being poor.

Families without dependent children face a lower risk of poverty. This is because expenses for food, education, and healthcare are more manageable, and adult incomes are often sufficient to cover basic needs.

Families with dependent children are more exposed to poverty and material deprivation. A larger number of members creates additional financial pressure for food, energy, educational, and healthcare expenses. For example, a family with two adults and three children living in a medium-sized city must divide income between food, transport, and school expenses, making it harder to maintain a sustainable standard of living.

A family with one child receiving only the minimum wage faces energy and food costs but often cannot cover expenses for books and school materials.

Families with three or four children often have to sacrifice savings or healthcare, increasing the risk of continuous material deprivation.

Social policies should be targeted toward families with children and the most vulnerable groups. Focusing on more complex and poverty-prone families ensures a fairer distribution of support, reducing material deprivation and maintaining the minimum living standard for children and adults.

This approach emphasizes the need for differentiated and targeted assistance, not general distribution, which may fail to address the unique financial pressure of families with children.

Well-being and income

AANJ 2024 data show that average monthly per capita income has increased significantly, from 41,479 lek to 51,122 lek, a nominal increase of 23.2%.

On the surface, this is a positive indicator showing economic improvement. However, when analyzed from a social perspective, the picture becomes more complex, as income growth is not equal across all groups.

Families with other and middle incomes benefit more from nominal growth. For them, this translates into greater consumption possibilities, savings, and small investments in education or healthcare. For example, a family with two average wages and small savings can buy more expensive food products, improve heating energy, and plan holidays or healthcare treatments.

Families in need, although partially supported by pensions and social assistance, do not fully benefit from nominal growth. High food and energy costs limit their real purchasing power.
A family with one adult working for minimum wage and receiving the mother’s pension may face difficult choices, such as sacrificing savings, not buying some necessary food, or reducing spending on education and transport.

A family with two children and one adult earning minimum wage in Fier or Elbasan, faced with rising food and energy prices, often covers only 65–70% of the actual monthly cost.

A pensioner in Tirana living alone and receiving 30,000 lek per month often covers only half of essential expenses, having to sacrifice for food or medicine.

Thus, income growth has not guaranteed an improvement in well-being for the weakest families. Inequalities remain visible, and many families cannot meet the minimum living standard. This finding highlights that economic growth in figures does not automatically translate into increased real-life living standards, especially for those facing higher basic costs and structural poverty.

Inequality and social cohesion

AANJ 2024 data show a modest improvement in inequality in Albania.

The Gini coefficient fell from 30.6% to 29.8%, indicating a slight reduction in income distribution inequality.

The S80/S20 ratio, which measures the difference between the highest and lowest incomes, fell from 5.0 to 4.8. This shows that families in the highest income group still benefit more from economic growth, while the weaker groups face ongoing challenges in maintaining the minimum living standard.

High-income families can invest in savings, private education, or home improvements, benefiting proportionally more from economic growth.

Families in need often use any additional income for basic expenses such as food, energy, and transport, not benefiting from opportunities for real well-being improvement.

A wealthy family in Tirana with two average wages and savings can cover energy and rent, buy more expensive food products, and plan healthcare services or holidays.

A family in a medium-sized city with a minimum wage and a small pension often has to sacrifice food or educational services for the children, maintaining only the minimum living standard.

The slight reduction in the Gini coefficient and the S80/S20 ratio does not guarantee significant improvement in the lives of the weakest families. Without active policies for income distribution and social support, macroeconomic improvements do not automatically translate into increased real well-being for the most exposed citizens.

Perspective for public interest

Analysis of AANJ 2024 data shows a divided picture of poverty and well-being in Albania.

What has happened with poverty?

From our analysis, there has been a slight decrease in the risk of being poor (from 19.8% to 19.2%) and in material and social deprivation (from 35.9% to 32.8%). However, one-third of the population remains at high risk, including families with children, pensioners, and individuals in low-income households.

How has well-being been affected?

Families with higher and middle incomes benefit from nominal income growth (+23.2%) and can improve consumption, savings, and small investments in health or education.

Families in need, even though partially supported by pensions and social assistance, still face high food and energy costs, limiting their real purchasing power. For them, social benefits are crucial to maintaining a minimum living standard but are insufficient to ensure sustainable well-being.

Economic growth in 2024 is not reflected equally in citizens’ real lives. Social policies, inflation control, and fair income distribution are key to protecting the real living standard and maintaining social cohesion.

Citizens face difficult daily choices regarding food, energy, education, and health, while published economic growth is not felt in their pockets. The economy may grow in figures, but the real purchasing power of weaker families and the middle class is under pressure, creating social risk and polarization.