Labour Costs and Regulations

Labour Costs and Regulations

Albania offers not only a highly skilled labour force but also one of the lowest labour costs in the region.

Minimum Wage The minimum wage in Albania is, as of July 2006, of 14 000 ALL a year (approx. 115 Euro or 150 USD). Currently the minimum wage in Albania is equal or lower than in many of the region’s countries.

Guaranteed Base Pay (Minimum Wage) – Comparison with the region in Euro

Source: National Statistics 2005 -2006, Federation of European Employers

Average Gross Wage Average Gross Wage – Comparison with the region

Source: National Statistics, 2004 data

Fact Sheet No.4

Last updated: February 2007

Labour Costs and Regulations

Mandatory Social Insurance Contributions As of September 2006, employer contribution to pension and disability insurance has been reduced by 9 points which brought about a 30% decrease in the total cost to the employer for both social and health insurance.

Gross annual salary in manufacturing (USD) – Regional Comparison

Source: MIGA, World Bank Enterprise Benchmarking Programme, 2005

Total annual labour cost to employer in manufacturing (USD)

Source: MIGA, World Bank Enterprise Benchmarking Programme, 2005

Fact Sheet No.4

Last updated: February 2007

Labour Costs and Regulations

LABOR REGULATIONS Employment contract Employment contracts can be for a limited or an unlimited time period, although most are issued for an unlimited period. Unless specified in the contract, the duration will automatically be considered an unlimited period contract.

Employment contracts must be presented in writing within 30 days from the starting date of employment and include the following: identity of the parties, the place of work, job description, starting date of employment, duration of the contract, holiday allowance, period of notification for the termination of the contract, salary details, and normal weekly work hours.

The first 3 months of employment are a Probation Period but it can be reduced or removed with a written agreement or a collective agreement (with all employees or a representatives of trade unions).

Working hours and holidays  Normal work hours are no more than 8 hours a day.  Normal work hours for employees less than 18 years are no more than 6 hours a day.  Normal work hours are no more than 40 hours a week.  If an official holiday falls on a weekend it is postponed to Monday.

Annual leave  Employees are entitled to a paid annual leave no less than 28 calendar days.

Overtime work & remuneration  Overtime hours are any additional hours over the normal work day of 8 hours or hours over the normal work day of a part time employee.  A full time employee can only work up to 10 supplementary hours a week (maximum working week 50 hours).  Work between the hours of 1900 and 0600 must be paid with a bonus of 20% to 50% of the regular rate.  Overtime hours must be paid with a bonus of 25% of the regular rate.  Work during weekends or official holidays is remunerated with a bonus, no less than 25% of the hourly rate or with time off that corresponds the duration of the supplementary hours + 25% more (1 hour of work on holidays = 1,25 hours time off).  Overtime hours during the weekends or official holidays are remunerated with time off or an increase in salary no less then 50% of the additional hours or the normal salary unless a different agreement has been signed as a collective contract.

Fact Sheet No.4

Last updated: February 2007

Labour Costs and Regulations

Termination of employment contract The termination of an employment contract should respect the regulations of the labour code. Employee termination differs based on the kind of contract.  Termination of the employment contract for an unlimited period – termination by one contracting party occurs after a 30 day minimum notice period.  Termination of employment contract for a limited period – termination at the end of the period determined in the contract.  Termination during the probation period – during the first 3 months of employment, the notice period is 5 days.  Immediate termination – this can occur at any time for justifiable causes. In case of unjustifiable causes the employer may be required by a court decision to pay a penalty of not more than one year’s salary.  Mutual agreement – both parties agree to terminate the employment contract.

Fact Sheet No.4

Last updated: February 2007