The Labor Market in Albania between numerical growth and structural obstacles

When increased participation does not equal real inclusion and economic cohesion.

In the first quarter of 2025, the labor market in Albania shows a modest strengthening of employment and labor force participation indicators. The official employment rate for the population aged 15–64 stands at 69.5%, an increase of 1.2 percentage points compared to a year earlier, while labor force participation has risen to 76.7%. These figures suggest an intensification of economic activity and a mild optimism in activating the population in the labor market.

However, these improvements remain mainly quantitative, without a deep structural transformation. Essentially, the growth is being sustained by the services sector, which accounts for the largest share of employment and shows a 6.4% annual increase. Meanwhile, agriculture continues to lose ground with a decline of 9.3%, and industry shows only a minimal technical increase of 0.1%, failing to substantially affect the economic structure or the demand for quality jobs.

This situation reflects a labor market that, although growing in numbers, is not addressing key challenges such as high informality, lack of quality jobs, and declining employment in key economic sectors.

Employment Growth as surface-level performance

Despite increases in employment and participation, there are troubling signs indicating a deeper issue in the quality and stability of the jobs being offered.

The services sector, which is the main driver of growth, is characterized by high informality and temporary contracts, offering neither stability nor long-term development opportunities, especially for young people.

The decline in agricultural employment is a major factor driving emigration, as many rural residents find no economic alternatives in their areas.

Industry, which has the potential to generate quality and value-added jobs, remains stagnant, unable to compete with the service sector.

Employment fails to retain youth in the country

One of the most pressing problems and key challenges of Albania’s labor market is the weak connection between young people’s needs and the actual opportunities offered by the economy. The unemployment rate among the 15–29 age group remains high at 17.9%, despite a modest decrease recently. A significant portion of economically inactive youth—about 72.7%—are still in education, attempting to prepare for the labor market. However, the transition from education to employment remains problematic, as many fail to successfully integrate into the formal labor market.

This gap between the education system and the market economy’s demands is evident in the lack of quality jobs, as well as poor prospects for professional development and economic stability. In a service-dominated economy—often informal and characterized by short-term contracts—many young people see emigration as the best path to stable work and better living conditions. This phenomenon is draining the country of its most qualified workforce and weakening its long-term development potential.

To address this challenge, public policy and the education system must work together to build strong bridges between education and the labor market, offering practical training, sector-specific programs, and entrepreneurship support for youth. Only in this way can mass emigration be curbed and real opportunities created for young people to remain and contribute to the country’s development.

Women and Vulnerable Groups show increased participation, but not real inclusion

In Q1 2025, female labor force participation rose to 70.9%, a positive indicator reflecting efforts toward greater gender inclusion in the labor market. However, this numerical increase does not reflect real and sustainable inclusion, as women continue to face major challenges and structural inequalities.

The employment rate for women is 63.3%, significantly lower than 75.8% for men, while their unemployment rate stands at a concerning 9.8%. This gap shows that women have fewer opportunities to enter and remain in the formal labor market, often facing unstable contracts, lower pay, and limited career advancement.

One of the main barriers contributing to this situation is the disproportionate burden of family care duties borne by women. The lack of adequate social support infrastructure—such as kindergartens, day-care centers, or services for people with special needs—limits their ability to participate in the labor market and develop sustainable careers.

Moreover, a significant share of the economically inactive population is due to household duties, representing an untapped labor force that could be mobilized through appropriate social and economic policies.

This situation calls for inclusive policies that address gender inequalities, including investment in social infrastructure, promotion of flexible work, and programs that support women’s career development and entrepreneurship.

Currently, policies for formalizing employment, facilitating youth entry into the labor market, and ensuring gender equality in employment are fragmented, unclear, and often out of sync with economic reality and market needs.

This lack of coherence explains why many citizens—especially youth and rural residents—see emigration as the only practical solution for a better life.

What needs to change, and how are EU Integration Policies impacting?

The labor market is facing complex challenges that require more than just numerical growth in employment. What the country needs is qualitative transformation—a shift from basic employment to value-added employment, focusing on strategic sectors such as manufacturing, modern technology, and advanced agriculture. Achieving this requires the creation of formal, long-term jobs that provide stability and professional growth.

Another key pillar is education and vocational training. Albania must strengthen its vocational and dual education systems, enhance cooperation with businesses, and invest in regional skills centers. This would allow young people to acquire practical and technical skills demanded by an economy in technological transition. Only quality vocational preparation can ensure a strong education-to-employment link.

Another critical dimension is regional development and rural integration. Policies should focus on supporting activities such as agro-processing, rural tourism, logistics, and infrastructure investment in isolated areas. This would not only prevent population outflow but also halt rural depopulation, preserving demographic and economic balance.

Inclusion of women and vulnerable groups remains another key point. Although female labor force participation has increased, ongoing obstacles related to child and elder care, and the lack of support infrastructure, continue to restrict their effective participation. Policies should address this through reskilling programs, flexible work arrangements, and gender equality measures.

A major issue is also the informality in the labor market. Fiscal incentives for formal employment must be improved, enforcement against informality strengthened, and registration processes simplified for seasonal and self-employed workers. Linking social insurance schemes to real benefits is also essential to incentivize formalization.

In this process, EU policies play a significant role. Integration with the EU has brought about legal harmonization and raised labor market standards, including through Chapter 19 of the acquis, which targets gender equality and working conditions. However, implementation is slow, due to limited institutional capacities. The EU Growth Plan for the Western Balkans (2024–2030) provides important support for vocational education, youth employment, and digitalization of services, while cooperation with the EBRD and IPA funds contributes to training center development and social reforms.

Yet, paradoxically, this integration process is also fueling emigration of the most qualified labor force. Visa liberalization, degree recognition, and the lack of competitive opportunities within the country are turning Albania into an exodus zone for talent. This is the greatest long-term challenge: how to retain and develop human capital, offering real career opportunities and a sustainable life for youth and professionals.

Albania must move from a fragmented approach to an integrated and inclusive strategy that connects education, regional economic development, gender equality, and formalization of employment. Only this way can the labor market become a driver of economic growth and social cohesion, halting emigration and building a more sustainable future for its citizens.

The labor market in Albania has made numerical progress, but structural challenges remain unresolved and are deepening: informality, sectoral imbalance, lack of quality jobs, gender inequalities, and the emigration of skilled labor. These continue to be major obstacles to the sustainable development of the labor market and the Albanian economy as a whole. Without addressing these issues, numerical growth remains only a partial reflection, not a transformative shift in the economic and social reality.