The Problem Of Unemployment In Albania Economics Essay

Albania is one of the economically last developed states in Europe. After the prostration of the Communist government, Albania achieved an economical growing, but poverty degree is still high. There is a strong nexus between poorness and unemployment because the deficiency of employment is one of the chief determiners of poorness. Albania is considered as a hapless state, thati??s why a high degree of unemployment exists. This is a phenomenon that disquiets the Albaniai??s society, so it is of import to discus about this subject. In this paper we are traveling to speak about the unemploymenti??s construct, how it is caused and its effects on the economic system and society. Besides, we are traveling to discus about the unemployment rate of Albania, during old ages and in comparing with the other states of Europe. Another point that will be shown in this paper is of class the safeguards taken by the authorities to cut down the unemployment rate. And eventually we are traveling to demo the decisions of our work.

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2. Unemployment Concept

Unemployment is the clip period when a individual isni??t really working, but available for work and presently looking for work. The on the job age population includes people from 16 old ages old to 65 old ages old for work forces and 60 for adult females. It consists of two groups: active population ( labour force ) and inactive population.


Fig.1 The distribution of population in working age

Labor force includes employed and those in hunt of employment ( the unemployment people ) . In this appraisal should be taken into history the difference between: -Individuals presently working, considered those who accomplish a collectible work of abode, even if temporally absent from work.

Outside the labour force are classified people that are in working age but they areni??t presently working or they doni??t want to. This group consists of pupils, the shut-ins, pupils of working age, those who perform military service, and individuals non presently looking for work. The flow of motion between these classs can be expressed with the Fig.2, where:

As we can see on Table1 that the lowest rate of unemployment during the last 10 old ages is 12.5 % in 2009, while the highest is 17 % in 2002 and 2003. It is noted that from 2000 to 2003 the unemployment rate has been increasing. While since 2004 to 2009 the unemployment rate has been cut downing. However these are high figures. Our state suffers from the phenomenon of unemployment.

Harmonizing to the study of the Central Intelligence Agency ( CIA ) official unemployment rate is instead distorted three times lower than the existent rate of unemployment. There are at least three grounds that make the information on unemployment rate non to be existent. The chief ground is informality, which is the figure of employees who areni??t declared from the employer. Besides, there are the unemployed who do non plead their ego as unemployed. In this instance they do non look in official records as unemployed. This is a job associated with deficiency of functionality and efficiency of office work. In the computation of the unemployment rate besides isni??t forgotten unemployment in agribusiness. Rural countries, in which lies the chief map of poorness in the state, are supposed with full employment, since no 1 is registered as unemployed. Harmonizing to the study of CIA about 58 % of the labour force in the state is concentrated in agribusiness, 27 % in the service sector and merely 15 % in industry. Harmonizing to the study, holding such a big labour force in agribusiness, when this sector provides 21.7 % of Gross Domestic Product and about zero unemployment rate, iti??s explained why harmonizing the official methodological analysis, the unemployment rate is merely 12.5 % . So, these are some of the grounds that make the unemployment rate non to be existent.

Fig.3 Unemployment rate on Europe

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Now we will compare the unemployment rate of Albania with the unemployment rate of the other states of the part and with the developed states of Europe for the twelvemonth 2009 ( Fig.3 ) . Albania is a state that has experienced a long passage, so its economic system is non really developed. The Albania ‘s unemployment rate is round 13 % . This rate is low compared with states of the part as Macedonia and Bosnia and Herzegovina with unemployment rates severally 34 % and 29 % ; is about the same degrees with Montenegro, Croatia or Turkey ; and is higher than the unemployment rate of the developed states such as Germany, Italy, France, United Kingdom, Netherlands, Norway, Denmark etc. So Albania has a high degree of unemployment, but at that place besides other states of the part with higher degrees of unemployment.

4. TYPES OF Unemployment

Unemployment is an inevitable procedure for each state, so that we can happen it among each individual in different sorts. The most sort of unemployment we can happen in Albania are:

4.1. Frictional unemployment, which is created as a consequence of continued motion of workers from one occupation in hunt of another occupation, which is better than the first. This sort of unemployment is inevitable and economically justifiable, as taking to more efficient redistribute of labour resources. In this group are besides included pupils who have merely been graduated and are looking for a occupation, or adult females that have been off for a piece from the labour market. These people are considered as voluntaries unemployed.

4.2. Structural unemployment, that occurs due to alterations in demand and the supply to work as a consequence of cardinal alterations happening in the basic subdivisions of economic system. If an economic system suffers from durable low aggregative demand, it means that many of the unemployed become disheartened, while their accomplishments ( including job-searching accomplishments ) become i??rustyi?? and disused. This means that they may non suit the occupation vacancies that are created when the economic system recovers. This sort of unemployment can besides be caused by technological advancements, since it means that fewer workers are needed to bring forth the same degree of end product every twelvemonth.

4.3. Cyclic unemployment is associated with worsening demand for certain goods and services, particularly at the phase of economic downswing, which leads to the diminution in demand for work force in the mills that manufacture these merchandises or services. This is caused by a concern rhythm recession and rewards non falling to run into the equilibrium degree.

4.4. Seasonal unemployment, which is related to seasonal nature of the merchandise or service, for illustration in the subdivisions of the building industry, touristry, etc. It is linked to certain sort of occupations.

4.5. Voluntary unemployment includes that group of people who choose non to work for different grounds, such as economical/financial grounds or any other.

4.6. Hidden unemployment is the unemployment that does non look in authorities statistics, due to the manner the statistics are collected. Merely those who have no work but are actively looking for work are counted as unemployed. Those who have given up looking, those who are working less than they would wish or those who work at occupations in which their accomplishments are underutilized are non officially counted as unemployed, though in a sense they are.


Unemployment is a procedure that is caused by different factors. Some of them relate to the general degree of economic activity, others are the consequence of a failure of the labour market in an economic system to work optimally.

First of all occupation supply is comparatively non flexible, which means that there is non an equal proportion between supply and demand. This comes out of the imperfectnesss in the labour market. A perfect labour market will ever clear and all those looking for work will be working, so that supply peers demand. However if the market doesni??t clear decently there will ever be unemployed people, waiting to happen a occupation. In Albania is really common to see pupils who have merely been graduated but presently non working. All this is a consequence of high degree of demand, but lower degree of supply. The economical crisis has besides affected in cut downing the work topographic points, which has increased the unemployment rate, ensuing in a high degree of occupation demand.

Second, another factor that effects in the procedure of unemployment is surely the low degree rewards. The lower the rewards, the more disgruntled the people will be, so that theyi??ll have to look for another occupation which gives them adequate incomes to face the life. The period of clip boulder clay they find a occupation, may be every bit long as they are considered as unemployed. In Albania this job is really common, since it is a state with low incomes which consequence in the rewards level that is non really high.

Another factor is of class technological alterations. Technological betterments allow for economic growing which is a necessity for increased criterions of life in an economic system. This is a good consequence, but can besides ensue with unemployment. First because less workers are needed to bring forth the same degree of end product and 2nd because this impact of technological alterations on the unemployment rate is dependent non on the degree and extent of this alteration, but besides on the ability of the economic system to suit the alteration. The economic system must be able to upgrade the accomplishments of the labour force and redesign house organisation if the engineering betterments are to expeditiously integrated into industries.

And eventually we can advert peoplei??s penchants about the manner they like to work and besides the fact that there is hapless information about the occupation chances. This will take people taking a long clip seeking for occupations, increasing so the degree of frictional unemployment.

6. Consequences OF Unemployment

Unemployment causes a batch of single and societal costs. A long period of unemployment reduces the human capital value and increases to malnutrition, unwellness, mental emphasis, and loss of self-esteem, taking to depression. Besides another effect of unemployment is that the unemployed people may lose their accomplishments. At another point when a individual is unemployed, he has deficiency of income. This causes less leisure. So the unemployment influences in the every-day life of the unemployed people.

Possibly the chief cost of unemployment is a personal one to those who are unemployed. However, if they suffer so the whole economic system and society suffer. High unemployment can do jobs such as increased divorce, lower life anticipation and declining wellness. Another job is offense ; if consumers possess less income than earlier, that is likely that offense degrees will increase. Unemployment usually consequences in a loss of income and reduces the long tally growing potency of the economic system. The unemployed could be bring forthing goods and services and if they are n’t, so GDP is lower than it could be. If some people choose to go forth the labour market for good because they have lost the motive to seek for work, this can hold a negative consequence on the economyi??s growing potency. As a consequence the whole economic system and society suffer from people being unemployed.

Besides high unemployment has an impact on authorities outgo, revenue enhancement and the degree of authorities borrowing each twelvemonth. Tax gross will fall because unemployed people are n’t gaining, and they hence are n’t paying revenue enhancement. As they are passing less, they contribute less to the authorities in indirect revenue enhancements. The authorities has to pay out benefits to back up the unemployed. The authorities loses out because of a autumn in revenue enhancement grosss and higher disbursement on public assistance payments for households with people out of work. The consequence can be an addition in the budget shortage which so increases the hazard that the authorities will hold. Enterprises with higher employment are likely to make better and do better net incomes. If they make less net income because of unemployment, they may hold fewer financess to put. This rise of authorities outgo and the autumn in revenue enhancement grosss may ensue in a higher authorities borrowing demand


Unemployment may hold advantages every bit good as disadvantages, for the full economic system. It may assist debar rising prices, which has damaging effects, by supplying a reserve ground forces of labour, which keeps rewards in cheque.

Full employment and monetary value stableness are two cardinal macroeconomic aims of each authorities. To battle unemployment, people in charge of economic policies frequently seek to give an drift to the economic system. With the decrease of unemployment, the economic system is nearing full usage of his accomplishments and labour market begins to retrieve. Companies find a great trouble in happening qualified workers and in footings of a high competition, wages start to turn up. Therefore, a low unemployment leads to lifting rewards, which increased by rising prices, generates a rise in monetary values. There is therefore an reverse relation between unemployment and rising prices, which means that lower degrees of unemployment will be associated with high degrees of rising prices. This relationship is called the Phillips curve, the name of the economic expert who analyzed the relationship between unemployment and rising prices. His research shows the possibility of accomplishing a low rising prices rate, but at a monetary value – a higher degree of unemployment. Data analyzed by Phillips found that rewards can be stable for approximately 5.5 % unemployment degree. When the unemployment rate is at a point near zero value, the degree of rising prices is highly high.


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Unemployment rate to a zero degree of rising prices is called the natural rate of unemployment. For a low unemployment degree, the degree of monetary values tends to increase and to a higher degree of monetary values tends to travel down. Thati??s the chief benefit that unemployment insures, but its rate is different in different states.

Everybody knows that Albania was the last of the cardinal and eastern European states to ship upon democratic and free market reforms. Thati??s why it is non every bit developed as the other states around it. Although Albaniai??s economic system has truly improved over recent old ages, it is still considered as one of the poorest state in Europe. Harmonizing to the authorities statistics, Albania experienced an mean 6 % one-year GDP growing during the period clip 2005-2009. During this clip, financial and pecuniary subject has kept rising prices comparatively low, averaging 2.9 % per twelvemonth. In 2009 rising prices increased to 3.4 % , public debt reached 55.9 % of GDP and the turning trade shortage was estimated at 26 % of GDP.

As we can see in Fig.4, during the period of clip 2000-2009 the rising prices rate has truly changed. In 2000 the rising prices rate has been really low, in proportion with the unemployment rate, which has been high, about 14 % . Subsequently, 2002-2003 shows the period of clip where the rising prices rate had its upper limit. After this clip the rising prices has come down drastically in 2004 and from so it has been altering with low degrees. In 2009 rising prices rate was 3.4 % sing to the unemployment rate which was 12.5 % . The authorities has to interact to maintain these two economic factors in a balance.


The authorities has to interfere continually to cut down the unemployment rate. The Albaniai??s authorities has taken some safeguards to abject the degree of unemployment. We can advert the gap of new workplaces, such as in substructure. The last old ages the authorities has realized a batch of undertakings in substructure and in this manner, there are opened new workplaces. Besides the authorities has risen up the rewards level for many profession classs and so the people are more motivated to work. The authorities has practiced preparation and plan applications to hike employment.

Reforms in the financial system, in the betterment of the concern environment by take downing revenue enhancements significantly, investings in substructure and the encouragement of foreign investings are the chief factors that has contributed to the economic growing and, accordingly, to the creative activity of new workplaces. So these are the chief safeguards that our authorities has taken to forestall and cut down the unemployment in Albania.

Unemployment is an inevitable procedure that happens in every state. It is caused by different causes, such as the degree of rewards, technological alterations or occupation supply, and it brings tonss of negative and positive effects. As negative we can advert single, societal and economic effects. And for positive effects ( benefits ) we can advert that unemployment averts the rising prices, since they have an reverse relation between each other. This phenomenon is seeable in every society, but it appears in different values. Although Albaniai??s recent economic growing has reduced poverty degree, it is still one of the states with the highest rate of unemployment. This rate has been altering over old ages and surely it has been cut downing. In 2009 this rate was 12.5 % . Iti??s non a low degree, but anyhow is the lowest degree Albania has of all time had in the last 10 old ages. This value matches with the rising prices rate which was 3.4 % in 2009. In comparing with the other states of the Europe it is ranked the 6-th, non a good value, but it has been bettering during old ages. A major consequence in this betterment has given the authorities reforms in the financial system or by opening new workplaces, lifting up the rewards level etc.


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