ALBANIA Social Protection Situational Analysis This project is funded by the European Union ALBANIA Social Protection Situational Analysis © 2022 International Bank for This work is a product of the staff of The World Bank with external contri- Reconstruction and Development / butions. The findings, interpretations, and conclusions expressed in this The World Bank work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. 1818 H Street NW, Washington DC 20433 This publication was produced with the financial support of the European Telephone: 202-473-1000 Union. Its contents are the sole responsibility of World Bank staff and do Internet: www.worldbank.org not necessarily reflect the views of the European Union. 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Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. ii ALBANIA Social Protection Situational Analysis ALBANIA Social Protection Situational Analysis Contents: LIST OF FIGURES iv LIST OF TABLES iv LIST OF BOXES iv ACKNOWLEDGEMENTS v LIST OF ACRONYMS vi 1. Introduction 1 2. Poverty and labor market outcomes 4 3. The social protection system in Albania 7 4. Cash transfers to support the poor, the vulnerable and persons with disabilities 10 5. Social services 14 6. Pensions 16 7. Employment and active labor market programs 20 8. Learning from the COVID-19 response 24 9. Reform priorities 27 BACKGROUND DOCUMENTS 29 iii ALBANIA Social Protection Situational Analysis List of Figures: Figure 1: Poverty headcount ratio at $5.50 a day (2011 PPP) (% of 4 population), 2021 estimates Figure 2: Since the financial crisis economic growth has become 4 less pro-poor Figure 3: Labor market indicators, Western Balkans 5 Figure 4: Spending on social protection has been rising over time, 8 driven by an increase in spending on social insurance Figure 5: Expenditure in social protection programs for selected 9 countries (% of GDP) Figure 6: Disability benefits as a share of total social assistance 10 spending, Europe and Central Asia, most recent year available Figure 7: Average Pension to Average Gross Wages 18 Figure 8: Social security contribution rates for OECD and 19 European Countries Figure 9: Expenditure on labor market policies as percent of GDP, 21 2018 Figure 10: The replacement rate of Albania’s unemployment 23 benefits is among the lowest in the region List of Tables: Table 1: Overview of the key challenges in Albania’s social 3 protection system Table 2: Overview of the social protection system in Albania 7 Table 3: Pension Parameters in Albania 16 Table 4: Recommendation matrix 27 List of Boxes: Box 1: The functions of social protection, social insurance, 7 social assistance and labor programs iv ALBANIA Social Protection Situational Analysis Acknowledgments This analysis has been prepared by a World Bank team composed of Cornelius von Lenthe, Sarah Coll-Black, Vlad Grigoras, Stefanie Brodmann, Zoran Anusic, Jamele Rigolini, Lorena Kostallari and Pascale Schnitzer. The team is grateful to Gozde Meseli Teague, Juna Miluka, Efsan Nas Ozen, Ana Maria Oviedo, Gonzalo Reyes, Hilda Shijaku, and Christoph Ungerer for their contributions and reviews of earlier drafts and associated materials, as well as to Maddalena Honorati who peer reviewed the draft report. Special thanks to Darcy Gallucio for editing and providing detailed comments, as well as Elizaveta Tarasova for the cover page and graphic design. The team would like to thank the Government of Albania for sharing data, feedback and views on the findings and recommendations. The team would specifically like to thank representatives of the Ministry of Finance and Economy, Ministry of Health and Social Protection, National Agency for Employment and Skills, the Social Security Institute, RisiAl- bania, Swiss Contact, the European Union, the United Nations Devel- opment Programme, and GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit) for their generous sharing of information that fed into the analysis in this Assessment and, in many cases, discussions on earlier drafts of the analysis as well as at a constructive consultation of the situ- ational analysis held in March 2022. The analysis was made possible due to the generous funding from Europe 2020 Trust Fund by DG NEAR. The note was prepared under the guidance of Linda van Gelder (Country Director for the Western Balkans), Emanuel Salinas Munoz (Country Manager for Albania) and Cem Mete (Practice Manager, Social Protection and Jobs Global Practice, Europe and Central Asia Region). v ALBANIA Social Protection Situational Analysis List of acronyms ALMPs Active labor market programs DA Disability Assistance DCM Decree of the Council of Ministers EAC Employment Advisory Council EBRD European Bank for Reconstruction & Development ECA Europe and Central Asia EU European Union GDP Gross Domestic Product GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit HBS Household Budget Survey INSTAT Institute of Statistics (Albania) ISS Social Security Institute Lek Albanian currency MIS Management Information System MoHSP Ministry of Health and Social Protection MoFE Ministry of Finance and Economy NAES National Agency for Employment and Skills NE Ndihma Ekonomike NEET Not in employment, education or training NES National Employment Service OECD Organization for Economic Co-operation and Develop- ment RoA Republic of Albania SA Social Assistance SPEED Social Protection Expenditure and Evaluation Database UNCRPD United Nations Convention on the Rights of Persons with Disabilities UNDP United Nations Development Program UNICEF United Nations Children’s Fund VET Vocational Education Training VTC Vocational Training Centre WDI World Development Indicators vi ALBANIA Social Protection Situational Analysis Introduction Despite a period of sustained economic growth, bilities, social services for vulnerable populations, Albania’s poverty rate has remained high and is labor market programs and unemployment insur- estimated to have increased during the COVID-19 ance, and old-age pensions. While each benefit or pandemic. While gross domestic product (GDP) service addresses a specific need against which its per capita increased by an average of 23.8 percent performance is often assessed, it is also important between 2011 and 2019, the incidence of poverty to analyze whether the system as a whole fulfills its remained relatively stable over the same period. objectives. Based on the latest data, 22 percent of the popula- tion lives on less than USD 5.5 per day. While Alba- Conceptually, social protection systems rest on four nia’s labor market had been trending in a positive main pillars: social assistance, social services, social direction, evidenced by increased employment and insurance and labor market programs. Social assis- female labor force participation, the employment tance generally aims to protect people from falling increases were largely in low wage sectors and due into poverty and provide support at certain points to a rise in informal employment. Albania imple- in the life cycle or respond to particular vulnerabil- mented a policy package with broad measures to ities. It encompasses non-contributory programs mitigate the impact of the COVID-19 crisis on the (that is, government funded), including non-con- poor and vulnerable and on the broader economy, tributory pensions (often called social pensions), yet the pandemic is expected to result in a signifi- and family- and child-related cash benefits. Social cant development setback. services support individuals and their families to improve their living conditions when facing various Across Albanian society, key demographic groups risks throughout the life cycle, such as children, are falling behind. Poverty and economic develop- adolescents and elderly people, and persons with ment continue to differ widely across regions, with disabilities. Social insurance aims to smooth income the central and northern regions having higher across the life cycle and protect people from shocks poverty rates, a significantly lower share in economic and typically comprises benefits based on indi- activity and lower employment rates than the rest vidual contributions (that is, old-age pensions, disa- of the country. Moreover, the participation of Roma bility pensions and survivors’ pensions); individuals and Egyptians (who represent around 3 percent of who contribute to these programs are entitled to the population) in the education system and labor benefits, usually based on the length and level of market is low. Important gender gaps also persist. their contribution. Finally, employment and labor For example, the female employment rate is 13 market programs aim to improve the functioning percentage points lower than the male employment of the labor market (through employment services), rate, and the average gender pay gap is 10 percent.1 to enhance labor supply (through training) and to increase labor demand (through subsidies or public To reduce the incidence of poverty, measures to works); they also seek to smooth income during create more job opportunities for all Albanians must unemployment (through unemployment insurance) be complemented by an effective social protection or to protect employment due to childbirth (through framework. Social protection is essential to protect parental benefits). people from falling into poverty and destitution; to help people cope with adverse idiosyncratic or Although the specific characteristics of each system systemic shocks and smooth consumption over their vary with history and local conditions, a social lifetime; and to promote human capital accumula- protection system should ideally satisfy four basic tion and ensure better access to jobs. Social protec- principles. The first is adequacy. The level and gener- tion comprises a variety of policy tools, including osity of support provided should reflect the level of cash transfers to the poor and persons with disa- need of poor and vulnerable households, without Back to table of contents 1 World Bank. 2020b. “Western Balkans Labor Market Trends 2020.” Vienna. 1 ALBANIA Social Protection Situational Analysis creating disincentives for work or productive invest- balance and sustainability remain. Reforms of the ments. The second is balance and effectiveness. Are last resort income support program, the Ndihma the funds allocated to each program used effec- Ekonomike, have improved its targeting and the tively or are there ways to improve impacts for equal application and delivery of benefits, although the levels of spending? Also, could the programs’ design adequacy of the benefit has eroded in recent years. be improved to better promote objectives such as The Disability Assistance reform is foundational to poverty reduction, employment and the acquisition broader reforms of disability benefits but it must of human capital? And is the balance of spending still be rolled out nation-wide; further changes also across programs appropriate given the popula- are required to ensure the effectiveness and equity tion’s vulnerabilities and needs both now and into of the system. Promising reforms of social services the future? The third element is equity. Govern- system have been initiated, with early results being ment spending on social protection systems should realized in strengthening the planning and financing invest more on the poor and vulnerable population of these services. However, these investments need than on the middle or upper classes—and possibly to be sustained, with further attention to strength- significantly more to promote equity in human ening the capacity of the ministry (and associated capital outcomes. The fourth and final element is agencies) to support local-level processes, estab- sustainability. Is the level of spending sustainable lishing the overall system for quality assurance and across time, and can the system honor the promises social inspection and promoting innovations, such made to future generations, in particular in terms of as the contracting out of services. For pension, pensions?2 reforms introduced in 2015 have improved the long-term sustainability of the system. Currently, The objective of this brief situational analysis is to the share of pension contributors is low, raising assess the extent to which each element of the social concerns about the future wellbeing of the elderly, protection system in Albania fulfills its purpose; to while fragmentation of the system still raises equity determine whether the system as a whole satisfies challenges. The employment agency has recently the four principles outlined above; and to identify overhauled its active labor market programs knowledge gaps and areas for reform in the short, according to international best practices. Expanding medium and long term, as well as lessons learned funding and coverage of these programs will have from the response to the COVID-19 pandemic. To be to be considered following their successful imple- sure, thoroughly addressing all these aspects would mentation, monitoring and adaptive management. require a multitude of exhaustive assessments and Finally, the COVID-19 pandemic drew attention to falls beyond the purpose of this review. Rather, the the exposure of poor and vulnerable populations to purpose of this situational analysis is to provide a shocks and how the rigidities in the current social holistic overview of the social protection system as protections system undermined the effectiveness a basis to discuss broad areas for reforms and needs of the response. As the recovery from the COVID-19 for further analyses. The situational analysis is part pandemic begins, it is important to note that this of a regional initiative, supported by the European will not be the last crisis to highlight such vulnera- Union (EU), to assess social protection systems bilities. In fact, rising energy and food prices as, in across the Western Balkans. part, caused by the war in Ukraine, are already again demanding a quick, dynamic and effective social The analysis finds that Albania has implemented protection system to respond. important reforms of the social protection system in the past years to improve the effectiveness and Table 1 summarizes the key challenges in Albania’s equity in the system. While some of these reforms social protection system as well as the main recom- are beginning to bear fruit, others must be sustained mendations to address them. The government and furthered to achieve the intended results. recognizes many of these challenges and is in the Spending on social protection in Albania has risen process of advancing these reforms, particularly steadily. This trend is largely driven by expenditures in the area of the DA program, social services and on social insurance, while spending on social assis- employment. tance is low and that on labor market programs and social services very low. A range of recent reforms provide a solid foundation to improve the effective- ness of the entire social protection system in the upcoming years, although concerns with the equity, Back to table of contents 2 Given that much of the social protection system is financed, administered and delivered by governments, a commitment to good governance, including transparency and 2 accountability, is also important. This is, however, not considered in this note. ALBANIA Social Protection Situational Analysis Table 1. Overview of the key challenges in Albania’s social protection system Area Main challenges Main recommendations • Erosion of the adequacy of benefits limits • Regularly review the adequacy of the NE benefit. the impact of the poverty-targeted Ndihma Ekonomike (NE). • Continue to assess performance of the NE to ensure it remains effective. • The new targeting system, which appears to be effective, needs to remain current. • Update the Unified Scoring Formula. • The new disability assessment only covers half the • Review delivery systems to ensure poor and country. vulnerable are being reached. Cash transfers • Physicians need to receive continuous training on • Scale up the new disability system to the whole conducting the assessment. country. • The disability assessment reform did not • Provide continuous training to physicians on the cover persons with paraplegia and with visual new disability assessment reform. disabilities. • Develop a monitoring system of the disability • While higher than other cash benefits, levels of assessment reform. monetary and non-monetary disability benefits do not account for the additional costs of disability. • Coverage of social services is low and linked to • Reforms to extend the coverage of social services low levels of public spending, which the ministry by increasing financing are nascent; these need will increase through the newly established Social to be furthered, including through regular and Fund. increasing allocations to the Social Fund. • Local authorities lack the capacity to effectively • Strengthen the capacity of the government to plan, implement and monitor social services. support local government units to plan, deliver Social Services and monitor social services. • Systems and procedures to support the planning, delivery, monitoring and evaluation of social • Put in place minimum standards for all social services need to be strengthened. services and strengthen the social inspection and monitoring of these services. • There is no case management system to support beneficiaries to access multiple services and • Strengthen case management to support the benefits. provision of integrated cash benefits with social services and employment support. • The share of pension contributors is low, raising • Monitor the evolution of key parameters. Pensions concerns on the sustainability of the system. • Explore complementary sources of retirement income. • The coverage of and spending on ALMPs is low. • Ensure effective implementation of ALMP reforms. • Vocational training is not demand-driven. • Advance implementation of the NE Exit Strategy and then review to learn lessons. Employment and • The implementation of the NE exit strategy was active labor market recently initiated. • Consider options for upskilling of special target programs (ALMPs) groups, such as seasonal or informal workers. • The generosity of unemployment benefits is inadequate. • Reform the unemployment benefits and carry-out detailed analyses to inform the revision of its parameters. • Despite a well-targeted poverty program (the NE), • Introduce crisis modifiers into the NE, including the government chose not to expand its coverage the identification of potential financing Disaster to newly poor households during the COVID-19 mechanisms. preparedness and crisis. • Build out the NE management information response • Unemployment benefits only covered a small system to create a social registry with potential share of those who lost their jobs due to the beneficiaries to allow for rapid scaling up of social pandemic. protection programs during crises. The situational analysis unfolds as follows: The next section reviews the main poverty and labor market outcomes in Albania; Section III provides a brief overview of the social protection system in Albania; Section IV looks at non-contributory cash transfers to support the poor, the vulnerable and persons with disabil- ities; Section V examines social services; Section VI analyzes pensions; Section VII explores employment and active labor market programs; Section VIII reviews the social protection response to the COVID-19 pandemic; and Section VIII and X conclude by identifying main areas for reforms and knowledge gap areas where more detailed assessments would be needed. Back to table of contents 3 ALBANIA Social Protection Situational Analysis Poverty and labor market outcomes With more than a third of the population living below the poverty line, Albania has the highest poverty rate in the Western Balkans. Poorly paid and informal jobs are widespread, and a large share of workers live in poverty. Poverty and labor market outcomes hide large disparities across regions and among different groups. Women, youth, persons with disabilities, and Roma and Egyptian populations are especially disadvantaged. Albania saw large reductions in poverty until the for which recent comparable poverty data exist 2008 financial crisis. Having emerged in the early (Figure 1).3 While economic growth was accompa- 1990s from 50 years under an authoritarian, isola- nied by a significant reduction in poverty prior to tionist regime as the poorest country in Europe, the global financial crisis, rates of poverty reduction Albania experienced steady, robust and inclusive initially stalled and then reversed, before dropping economic growth into the early 2000s. Albania slightly since 2014. This is despite steady growth is now a middle-income country on the cusp of since 2014, which indicates that economic growth starting formal negotiations for membership in the has become less pro-poor (Figure 2). That is, while European Union. However, the pace of inclusion has a 1 percentage point (p.p.) increase in GDP between stalled since the macro-fiscal crisis of 2008. At 22 2002 and 2008 was associated with a reduction percent of the population in 2017, Albania’s absolute in poverty of 1.2 p.p., this fell to a one p.p. increase poverty rate (measured at USD 5.5 per person per in GDP resulting in only 0.8 p.p. poverty reduction day, in purchasing power parity) is currently the post 2014.4 Projections suggest that poverty has highest among countries in the Western Balkans increased as a result of the COVID-19 pandemic.5 Figure 1. Poverty headcount ratio at $5.50 a day Figure 2. Since the financial crisis economic (2011 PPP) (% of population), 2021 estimates growth has become less pro-poor 25% 60% 8% Poverty Headcount Rate (USD 5.5 PPP) 22% 7% 50% 20% 19% 6% 17% 40% 16% 5% 15% 30% 4% 3% 10% 20% 10% 2% 10% 1% 5% 3% 0% 0% 2% 2011 2017 2010 2013 2014 2007 2008 2015 2003 2004 2012 2005 2002 2016 2006 2009 0% ALB KSV MKD MNE SRB 7STEE EU Poverty ($5.5), left Real GDP Growth (%), right Source: World Bank. 2022. Steering through Crises. Western Source: World Bank. 2020a. Systematic Country Diagnostic: Balkans Regional Economic Report No. 21. Spring 2022. Note: 2019 Update. Washington, DC. ALB, SRB, MKD, MNE, 7STEE and EU estimates are derived Note: In this graph, unlike in Figure 1, the poverty rate is from the income based SILC-C data, whereas KSV is measured measured using the consumption based HBS. This poverty using the consumption based HBS. Income measures in the rate is not comparable to the poverty rate derived by the SILC and consumption measures in the HBS are not strictly income-based SILC. comparable. Back to table of contents 4 3 This situational analysis uses estimates based on consumption of households from the 2014 Household Budget Survey. More recent estimates use estimates based off of the Survey on Income and Living Condition (SILC), estimating that income poverty has reduced since 2016. Nevertheless, even using recent estimates of income poverty Albania continues to have the highest poverty in the Western Balkans at 31.8 percent in 2019. (Source: World Bank. 2021a. Greening the Recovery. Western Balkans Regular Economic Report No.20. Fall 2021. Washington, DC.) 4 World Bank. 2020a. Systematic Country Diagnostic: 2019 Update. Washington, DC. 5 World Bank. 2021. Subdued Recovery. Western Balkans Regular Economic Report No.19. Spring 2021. Washington, DC. ALBANIA Social Protection Situational Analysis Regional disparities in living standards persist, Albania’s labor market had been trending in a although within areas, poverty is associated with positive direction, although much labor growth larger households and lower education. In Albania, was concentrated in low wage sectors. In 2019, prefectures along the coast and in the south tend the employment rate reached a record 61.2 percent to be better off relative to those in the central (68.2 percent among men and 54.4 percent among and northern regions, which have less economic women, Figure 3) and female labor force participa- capacity and heightened exposure to natural tion climbed to 61.6 percent (compared with 77.6 hazards. Regionally comparable data are sparse, percent for men).8 Employment grew by 42,000 but data from 2012 show the capital city of Tirana persons (or 3.4 percent) between the second quarter having a poverty rate of 11.7 percent. This is almost of 2018 and the second quarter of 2019, and more half of the highest poverty rate of 20.6 percent in than half of those new jobs went to women and the north-east.6 Similar regional disparities exist 25-54 year olds.9 The largest portion of the employ- across a variety of welfare indicators, such as, inter ment increase, however, was in low-wage sectors alia, GDP per capita, housing conditions and the and due to a rise in informal employment of 30,000 number of families receiving social assistance.7 (or 6.7 percent) between the second quarter of 2018 Poverty and economic development have a strong and the second quarter of 2019. During the same geographic dimension; but once controlling for time period the share of long-term unemployment geography, those affected by poverty tend to live in decreased by more than 3 percentage points, to 64 larger households with many dependents and in a percent of total unemployment, which was below household whose head has little education. Low pay the regional average but still well above the EU continues to be a key contributor to high poverty average.10 rates, stemming from structural issues surrounding Albania’s economy and labor market, as elaborated below. Figure 3: Labor market indicators, Western Balkans a. Employment rate b. Unemployment rate 80% 60% 70% 50% 60% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% WB6 ALB BIH MNE MKD SRB KSV WB6 ALB BIH MNE MKD SRB KSV Total 15-64 Male 15-64 Female 15-64 Total 15-64 Male 15-64 Female 15-64 Total 15-24 Male 15-24 Female 15-24 Total 15-24 Male 15-24 Female 15-24 c. Inactivity rate d. NEET rate, ages 15-24 years 90% 30% 80% 25% 70% 60% 20% 50% 15% 40% 30% 10% 20% 5% 10% 0% 0% WB6 ALB BIH MNE MKD SRB KSV WB6 ALB BIH MNE MKD SRB KSV Total 15-64 Male 15-64 Female 15-64 Total Male Female Total 15-24 Male 15-24 Female 15-24 Source: SEE Jobs Gateway: https://data.wiiw.ac.at/seejobsgateway.html. Note: Data for employment, unemployment and inactivity are for the second quarter of 2019; data for NEET rate are for 2018. Back to table of contents 5 6 Jorgoni, Elira (2019). ESPN Thematic Report on In-work poverty – Albania, European Social Policy Network (ESPN). Brussels: European Commission. 7 World Bank. 2020a. Systematic Country Diagnostic: 2019 Update. Washington, DC. 8 Republic of Albania. 2021. “Economic Reform Programme 2021-2023.” Tirana. 9 World Bank. 2020b. “Western Balkans Labor Market Trends 2020.” Vienna. 10 World Bank. 2020b. “Western Balkans Labor Market Trends 2020.” Vienna. ALBANIA Social Protection Situational Analysis Despite these positive trends, Albania’s work- workers live in households at risk of poverty.17 ing-age population continues to shrink as people Employment status, however, is closely associated emigrate in search of better job opportunities. with income-level, suggesting that wage employ- The Albanian diaspora represents 57 percent of the ment is still central to securing a household’s country’s current population, one of the highest in wellbeing. Wage employment is concentrated in the world. In 2019, the Balkan Barometer indicated the upper quintiles, while self-employment and that 50 percent of the Albanian total population unemployment are more likely in the lower quin- would consider living and working abroad.11 While tiles. However, given that job creation is largely in Albania’s total population of 2.8 million (2020) has the informal sector and that self- and part-time remained constant since the early 1980s, it has employment in Albania remain high, the scope to aged rapidly due to the continuous emigration of move into jobs that will lead to more secure income working-age Albanians and a decline in the fertility is limited. rate, from 3.4 in 1980 to an average of 1.62 between 2015 and 2020. In 2020, births exceeded deaths Women, youth, persons with disabilities, and Roma by only 470, much lower than the 10,345 in 2016. and Egyptian populations have significantly worse This large-scale migration combined with an aging labor market outcomes. The employment and population presents a challenge for the sustaina- activity gap between men and women continues bility of the pension scheme. to be high, as discussed previously. This is partially attributed to a lack of childcare and increasingly a Labor productivity in Albania is low and has stag- lack of elderly care,18 high maternity-leave benefits nated due to high informality, part-time work and and societal norms. A lack of services (such as, a large workforce in agriculture. Although Alba- childcare) is often especially striking among minor- nia’s unemployment rate is lower than the regional ities:19 only 18 percent of Roma and Egyptians are average, many of those in employment are either employed.20 Albania has the second highest rate of underemployed and/or work in low-productivity young people who are not in employment, educa- sectors. In relation to other Western Balkan coun- tion or training (26.5 percent), only slightly less than tries, Albania has the highest share of employees Kosovo (Figure 3 above). This is largely a result of in self-employment (34 percent versus the regional Albania’s low levels of vocational education and average of 22.9 percent in 2018) and in part-time training (VET), with only 18 percent of students employment (18.3 percent versus the regional enrolled in such programs, relative to an average of average of 10.6 percent in 2018). In rural areas, 58 percent in the six Western Balkan countries.21 agriculture represents a disproportionately large share of the employed, with 40 percent of workers continuing, despite recent decreases, to work in the private agricultural sector.12 In urban areas, informal basic occupations represent the largest share. Further, the informal economy is estimated to range between 25 and 50 percent of GDP.13 Large parts of the agricultural sector continue to be informal, with women representing 80 percent of all informal workers in agriculture.14 Household incomes remain low, with a higher prev- alence of poverty among the self-employed and unemployed than wage employees. These trends in the labor market are reflected in the country’s average monthly gross wage, which was 70 percent of the Western Balkan average (EUR 425 gross per month).15 The contribution of labor earnings to poverty reduction is limited and is lower than in the period prior to 2008, when real wages grew, on average, at close to 10 percent per year.16 The level of in-work poverty was estimated to be 39 percent in 2018, meaning that nearly half a million Albanian Back to table of contents 6 11 Weiss, Stefani. 2020. “Pushing on a String? An Evaluation of Regional Economic Cooperation 17 Jorgoni, Elira (2019). ESPN Thematic Report on In-work poverty – Albania, European Social in the Western Balkans.” Vienna Institute for International Economic Studies (wiiw). Policy Network (ESPN). Brussels: European Commission. 12 Institute of Statistics (INSTAT). 2020. “Employed by Sectors 2000-2019.” Tirana: Republic of 18 World Bank, 2019b Albania. 19 Hazizaj, Altin. 2017. “Roma Children Access to Local Government Services in Albania,” no. 13 European Bank of Reconstruction and Development (EBRD). 2019. “Albania Diagnostic.” April. http://www.crca.al/every-roma-child-kindergarten. London. 20 Robayo-Abril, Monica, and Natalia Millán. 2019. “Breaking the Cycle of Roma Exclusion in the 14 World Bank. 2020a. “Systematic Country Diagnostic: 2019 Update.” Washington DC. Western Balkans.” Washington, DC. 15 World Bank and Vienna Institute for International Economic Studies (wiiw). 2019. “SEE Jobs 21 Eurostat: EDUC_UOE_ENRS04. For Albania: INSTAT database. Pupils enrolled on upper sec- Gateway.” Vienna. ondary by type of school 2012-2020. For Kosovo: KASaskdata. Number of pupils in upper 16 Real wage growth rate was 2.1 percent per year between 2014 and 2018 (Source: World secondary education, 2015-2020. Note: Numbers refer to 2018. Bank 2020a). ALBANIA Social Protection Situational Analysis The social protection system in Albania Albania has a robust social protection system, comprised of social insurance, social assistance, social services and employment programs. The institutional arrangements are well established, encompassing central ministries and agencies and local government units. Within this context, spending on social protec- tion in Albania has risen steadily and is currently comparable to the average social protection spending in Europe and Central Asia (ECA). Social protection spending in Albania is dominated by spending on social insurance, which has driven the rise in social protection spending since 2000. In contrast, spending on social assistance has remained largely constant, at levels that are comparable with peer countries and those in ECA, while spending on labor market programs and social services is low. In Albania, the social protection system rest on protection (Box 1 articulates the universal functions the four main pillars universal to all systems: social of each of these pillars.)22 In the sections that follow, assistance, social services, social insurance and these four broad categories are modified to reflect labor market programs. These broad categories are the structure of the social protection system in applied globally and underpin most analysis on social Albania, as laid out in Table 2. Box 1: The functions of social protection, social insurance, social assistance and labor programs Conceptually, social protection systems rest on the main pillars of social insurance, social assistance, social services and labor market programs. Social insurance aims to smooth income across the life cycle and to mitigate shocks and typically comprises benefits based on individual contributions (that is, old-age, disa- bility and survivors’ pensions); individuals who contribute to these programs are entitled to benefits, usually based on the length and level of their contribution. Social assistance aims to protect people from falling into poverty and to provide support along the life cycle; it encompasses non-contributory programs, including non-contributory pensions (often called social pensions), and family- and child-related cash benefits. Social services support individuals and their families to improve their living conditions when facing risks throughout the life cycle, including children, adolescents and the elderly and persons with disabilities.23 Finally, employ- ment and labor market programs aim to improve the functioning of the labor market (through employment services), improve labor supply (through training) and increase labor demand (through subsidies or public works); they also seek to smooth income during unemployment (through unemployment insurance) or to protect employment due to childbirth (through maternity or parental benefits). Table 2: Overview of the social protection system in Albania Category Benefits and programs • Last resort social assistance (Ndihma Ekonomike or NE) • Disability Allowance Cash transfers to support the poor, the • Energy, vaccination, education and kindergarten subsidies24 for NE beneficiaries vulnerable, and persons with disabilities • Allowances for war invalids and veterans • All pensions funded by the state budget (the social pension, see below) Social services • Social and family services Contributory pensions (state budget funds the deficit) • Old-age pension • Disability pension Pensions • Survivor’s pension • Sickness leave Non-contributory pensions, funded by the state budget • Social pension Source: Authors’ elaboration. Back to table of contents 7 22 Health insurance is not considered in this note, although it forms part of social insurance mechanisms. 23 Lindert, K, et al. eds. 2020. Sourcebook on the Foundations of Social Protection Delivery Systems. Washington, DC: World Bank. 24 Fees for kindergarten are waived for NE beneficiaries. ALBANIA Social Protection Situational Analysis • Vocational training • Public works • Wage subsidies Employment and labor market programs • On-the-job training and internships • Entrepreneurship support • Unemployment Benefit • Maternity benefit25 Source: Authors’ elaboration. The social protection system enjoys well estab- on average, 15.9 percent of GDP on social protec- lished institutional arrangements, encompassing tion in 2019.32 The steady rise in social protection central ministries and agencies and local govern- spending in Albania has been largely driven by ment units. The Ministry of Health and Social Protec- social insurance spending, representing 7.6 percent tion (MoHSP) is responsible for social assistance and of GDP (Figure 4). In contrast, social assistance social services, setting policies, providing financing spending has remained largely constant over this and supervising the State Social Services. The State period, despite year-on-year fluctuations. Currently, Social Services are responsible for implementing the spending on social assistance is 1.6 percent of GDP, NE and DA through local government units. The local which is roughly consistent with the average among government units are responsible for assessing eligi- ECA countries (1.7 percent) and upper-middle-in- bility26 and for providing services, with oversight and come countries (1.6 percent) but below the average quality assurance by the MoHSP and Social Services among Western Balkan countries (2.2 percent). In Inspectorate. Social services have hybrid (central and Albania, spending on labor market programs in this local) funding. The independent Social Insurance period remained low and is currently 0.05 percent Institute (ISS) administers contributory benefits (such of GDP, while spending on social services in 2019 as, the old-age, survivors’ and disability pensions), was a mere 0.04 percent of the GDP.33 The sections employment-related benefits, and non-contribu- that follow discuss spending trends for each of the tory benefits directed to pensioners. The Ministry pillars of the social protection sector in Albania. of Finance and Economy (MoFE) supervises the ISS. The MoFE is responsible for collecting all social and health insurance contributions, except those of self-employed farmers.27 Within the MoFE, the General Directorate of Economic Development and Employment is responsible for the employment and vocational education and training (VET) portfolio. It oversees the State Inspectorate of Labor and Social Services, the National Agency for Employment and Skills (NAES) and the National Agency for Vocational Education and Training and Qualifications. There are several supporting consultative bodies such as the National Labor Council and its Sectoral Commissions, the National Council of Skills and Vocational Educa- tion and the Employment Advisory Council (EAC). Social protection spending in Albania has been increasing since 2000, a trend largely driven by rising spending on social insurance, while spending on social assistance has remain constant. Spending on social protection28 in Albania has risen steadily since 2000, increasing from 7.3 percent of GDP in 2000 to just over 9 percent of GDP in 2019 (Figure 4).29 As a percent of GDP, spending on social protec- tion in Albania in 2019 was roughly the same as the average for ECA countries at 9.51 percent30 and only slightly below the average in the Western Balkans region (10.4 percent of GDP)31 (Figure 5). In comparison, European Union member states spent, Back to table of contents 8 25 The discussion on maternity benefits is included in the section on labor market programs. 28 This analysis of social protection spending is based on World Bank SPEED and, thus, follows However, in the analysis of social protection spending in this section, it is categorized under its classifications. social insurance. 29 This section considers spending in 2019, that is, prior to the COVID-19 pandemic. 26 Nineteen out of 29 of the local units, which are staffed by social administrators, are 30 Based on World Bank SPEED, most recent data available. managed by the central government, with the remaining falling under the responsibility 31 This is the arithmetic average of the latest data available, as is also referenced in Figure 5. of municipalities. Staff are hired by the responsible level of government, while in all cases 32 EUROSTAT, ESSPROS, excludes admin expenditure and health/ sickness benefits. Most operating costs are funded by the state budget. recent year available. 27 The MoFE collects social and health insurance contributions through the Directorate General 33 Based on latest data available from World Bank SPEED. Spending on social services excludes of Taxation. The Social Insurance Institute collects contributions from self-employed farmers any spending by local government units. The budget on social services is defined very who contribute to the rural scheme. narrowly and does not include services, such as child protection, police or health services. ALBANIA Social Protection Situational Analysis Figure 4: Spending on social protection has been rising over time, driven by an increase in spending on social insurance 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Labor Market Programs Social Assistance Social Services Social Insurance Source: World Bank estimations based on Social Protection Expenditure and Evaluation Database (SPEED) administrative data. Note: Information on expenditures for social services is only available until 2014 and only includes central-level spending. Figure 5: Expenditure in social protection programs for selected countries (% of GDP) 16% 14% 12% 10% % of GDP 8% 6% 4% 2% 0% SVK KSV ALB MNE MKD BGR BIH SRB ROU WB6 2017 2017 2019 2019 2019 2017 2018 2019 2017 Average - latest year*** Labor market programs (%) Social assistance (%) Social insurance (%) Social services (%) Source: World Bank SPEED. Note: *** Simple arithmetic average of the total social protection spending (percentage) among the six Western Balkan countries on the chart: Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia. Back to table of contents 9 ALBANIA Social Protection Situational Analysis Cash transfers to support the poor, the vulnerable and persons with disabilities In Albania, two cash transfer programs constitute the vast majority of spending on social assistance: the Disability Assistance (DA) and the Ndihma Ekonomike (NE). The government has reformed the NE to better reach extremely poor households while also investing in its delivery systems. These reforms appear to be bearing fruit with initial evidence of improvements in its effectiveness, although further analysis is needed to confirm that the program continues to deliver on its objectives. However, erosion of the adequacy of benefits limits its impact on poverty. The reform of the DA system, which is foundational to the broader disability reform, is ongoing and will be expanded nationwide, with anticipated benefits in terms of the effectiveness of the system. Building on this reform, further assessment of the benefits to people with disa- bility to improve their adequacy and equity. Strengthening the linkages with social services and employ- ment support can better support beneficiaries of the NE and DA program. Social assistance in Albania is dominated by two amounting to 76 percent of social assistance spend- main programs, both of which have undergone ing, while the NE accounts for 21 percent of social significant reforms in recent years to improve their assistance spending and the remaining programs effectiveness and equity. Albania’s social assis- together amount to 3 percent. The amount allo- tance system is comprised of two main programs, cated to the DA program, as a percentage of social the Disability Assistance (DA) program and the assistance spending, is unique in the region, with Ndihma Ekonomike (NE), which are complemented most countries allocating less to disability-targeted by a suite of very small benefits. In recent years, the cash benefits (Figure 6).34 In contrast, spending on government has undertaken significant reforms of the NE appears to be below regional trends: in 2019, the DA program and the NE to improve their effi- NE spending was equivalent to 0.25 percent of GDP, ciency and equity, with support of the World Bank, which was lower than the average of 0.35 percent as discussed in the paragraphs that follow. The DA spent on Last Resort Income Support (LRIS) pro- program is the larger of the two programs, in 2019, grams in ECA countries.35 Figure 6: Disability benefits as a share of total social assistance spending, Europe and Central Asia, most recent year available 80% 60% 40% 20% 0% K 019 R 017 17 19 17 L 16 - 2 - 4 M -2 7 17 M -2 7 17 A 12 B 017 K 19 - 7 17 17 U 017 V 017 V 14 G -2 7 H -2 7 N 20 R 016 E 16 17 1 1 1 1 1 1 LR 1 KD 0 0 B 20 0 0 N 0 0 ES 20 0 KR 0 EO 0 20 ZE 0 0 ZB 0 0 SV 20 CZ 20 B 20 KS 20 U 0 B -2 M -2 R -2 KA - 2 SR - 2 KG - 2 A -2 R -2 H -2 U -2 A -2 LV - 2 2 U -2 PO - 2 TU - 2 - - - - - IH A Z Z T M E LB S TJ U G D O R R A Source: World Bank SPEED. Back to table of contents 10 34 A similar trend is observed when considering disability-related social protection spending as a percentage of GDP. 35 World Bank SPEED. LRIS includes poverty-alleviation programs and poverty-targeted subsidies for health and housing. ALBANIA Social Protection Situational Analysis Ndihma Ekonomike the minimum wage, 13 percent of the unemploy- ment benefit and 25 percent of the social pension.41 Albania’s last-resort income support program, For a beneficiary household consisting of two adults the Ndihma Ekonomike, appears to be effectively and two children, the benefit is equivalent to 18.5 reaching poor households. The Ndihma Ekonomike percent of the poverty line of USD 3.20 per day (NE) is the main cash transfer program in Albania, and 10.7 percent of the USD 5.50 per day.42 The low providing support to poor households. In 2011, relative value of the current NE benefit may arise, the Social Assistance Framework Law established in part, from the fact that the nominal value of the the legal basis for revising the NE eligibility crite- NE has not been increased since 2018. In contrast, ria. This revision removed binary filters and adopted the minimum wage, and by extension unemploy- a Unified Scoring Formula (USF) that would better ment benefits and the social pension, have been identify the extreme poor population.36 The new regularly updated over this same period. Notably, eligibility criteria and targeting procedures were ini- as discussed in the section below on the COVID-19 tially piloted and then scaled-up nationwide from response, the government doubled the value of the January 1, 2018. To complement the USF, the target- NE benefit during 2020 and for the first six months ing system has flexibility embedded in it to correct of 2021 as part of the broader response to the pan- for potential exclusion errors: those not passing the demic. More recently, the government has signaled eligibility threshold can still receive benefits after its commitment to increasing the benefit more reg- going through a socioeconomic assessment carried ularly, starting with a 10 percent increases in 2022 out by a local administrator, which is supported by and an additional doubling of NE benefits for fam- six percent of the NE budget. According to admin- ilies with three or more children and a tripling for istrative data, the NE reached about 9 percent of social categories (orphans and victims of violence the population in 2019. In the same year, based on and trafficking). the EU-SILC, 45.2 percent of the NE benefits were received by the poorest 10 percent of households, In addition to cash transfers, the NE provides a while before the reform, in 2018, the percentage set of complementary benefits. Small top-ups are was 42.6. However, the USF eligibility criteria37 and provided to NE beneficiaries for every child up to their weight in the total score were estimated using the age of 16 years who attends school regularly survey data that is now seven years old.38 During (Lek 300 per month or around EUR 2.5) and is on this period, the profile of the most vulnerable pop- track with their immunizations (Lek 100 per vacci- ulation, and thus the characteristics that predict nation or around EUR 0.8). An electricity subsidy is their poverty, have likely changed.39 If the formula also provided (Lek 1,288 or around 10 EUR)43 and worsened, fixing it would have two possible effects: NE beneficiaries are able to send their children to a decrease in the exclusion errors (households that kindergarten free of charge as of late 2021. Accord- are truly poor but are excluded because of charac- ing to data from the NE management information teristics that are not relevant anymore) and a reduc- system (MIS), in July 2021, just less than 37 percent tion of inclusion errors (households that are not of NE beneficiaries received the electricity subsidy. poor but manage to be included into the program Similarly, in December 2019, out of all NE recipi- because the eligibility criteria allow them). For ent households with at least one school-age child example, according to the 2019 SILC, the NE covers (7-15 years old), 52.3 percent received the educa- 23 percent of households in the poorest quintile tion grant. The education subsidy is provided only and 32 percent for the poorest decile.40 for the nine months of the school year. Assessing the full benefit of these complementary grants may Recent analysis indicates that the purchasing help inform efforts to graduate households from power of the NE benefit may have eroded over the NE, while also protecting poor households from time. The average NE benefit amount increased shocks (such as those transmitted through energy 17 percent between 2017 and August 2019, repre- prices) and promoting human capital accumulation. senting an important commitment to beneficiar- NE beneficiaries are also supported to access social ies meeting their basic needs. More recent analysis services and employment programs for employ- suggests that the NE benefit may now trail other ment activation, as discussed under the section on social benefits in Albania, as these are more regu- Employment below. larly updated. Comparing the NE benefit levels (as set out in legislation), in 2021, a household consist- Investments in the NE delivery systems—notably ing of one adult member is equal to 6.5 percent of the outreach application, payment and grievances, Back to table of contents 11 36 In addition, the NE aims to support other types of beneficiaries: orphans who are not in social care prevalence of computers increased significantly, together with their decrease in costs, which may also institutions; parents with two or more babies who are born simultaneously belonging to the families reduce its predictive power. Several indicators in the current formula refer to the type of heating, and in need; victims of trafficking after they have left the social care institutions until they are employed; because of the continuous increase in the percentage of people connected to gas and electricity, the victims of domestic violence for the period of validity of the protection order or immediate protection current weight of all these indicators may be overestimated. order that are not treated in the social care institutions. 40 The 2019 SILC underestimates the coverage of the NE, reporting national coverage of 7 percent. 37 Examples of variables are the composition of the household (the number of elderly or the number of 41 World Bank staff calculations for a note on NE benefit adequacy prepared for the Ministry of Health women in the household), ownership of devices (a video/DVD player or dishwasher) or type of heating and Social Protection in 2021. used by the household. 42 World Bank staff calculations for a note on NE benefit adequacy prepared for the Ministry of Health 38 Institute of Statistics (INSTAT). 2014. “Household Budget Survey.” Tirana: Republic of Albania. and Social Protection in 2021. Calculated at per capita level for comparison to international poverty 39 For example, the usefulness of DVD players may have decreased, in general, and because of this, its lines. presence in a household may not be a good indicator of its welfare status anymore. In addition, the 43 Decree of the Council of Ministers No.565/2006 (Lek 640) and No. 8/2015 (Lek 648). ALBANIA Social Protection Situational Analysis have contributed to the improved performance up to the whole Tirana region starting in 2020. of the program. The application process has been During this period, significant results were achieved: streamlined and the average time to determine eligi- (i) the disability assessment methodology, including bility is five days. Currently, to apply to the program, forms and guidelines and training materials, were individuals must physically go to local offices, show developed and tested; (ii) an MIS for the reformed their IDs and provide the information that is required assessment was developed; (iii) the necessary leg- to apply the Unified Scoring Formula. The NE then islation for implementing the reform was developed carries out home visits and cross-checks with other and approved; and (iv) the members of the Assess- administrative databases to verify the information. ment Committees and the other physicians from Payments are made through the Albanian Post Tirana were trained. The reform has been scaled Office or banking services near the administrative up in two other regions (Durres and Elbasan) since units where the beneficiary resides. To register any the end of 2021. In 2020, the disability allowance complaints, beneficiaries must physically go to the program provided benefits to nearly 6 percent of local offices. However, the COVID-19 pandemic has Albania’s population (or 167,000 people). drawn attention to the barriers this process may pose, particularly for disadvantaged segments of While this progress is commendable—and at the the population who may be far from such offices. forefront of disability reform in the Region—it For this reason, the MoHSP is assessing outreach to needs to be complemented by further investments beneficiaries and their experience of applying to the to deliver on the objectives of the reform. Firstly, NE to inform further efforts to strengthen program the new disability assessment system needs to be delivery. scaled up nationwide. The government recognizes this and has initiated the expansion of the DA, Investments in an MIS have strengthened the started with intensive training of staff in the new delivery of the NE and could be harnessed further regions. Second, continuous training to all physi- to improve the understanding of the poor popu- cians with a role in the DA is required, together with lation, their needs and access to benefits and ser- further updating the guidelines and assessment vices. As of January 1, 2018, the NE’s new, nation- forms, improving the system to handle complaints wide MIS can cross-check the information provided and significantly strengthening the capacity and by NE applicants across multiple agencies. The MIS powers of the Social Inspection Team to reduce the includes an integrated case management module risk of error, fraud and corruption. Thirdly, the new with the ability to record and manage grievances, DA reform does not cover persons with paraplegia complaints and appeals. This MIS also includes and with visual disabilities,46 which creates inequi- a beneficiary registry, including those who have ties in the system. Therefore, there is a need for the applied and exited the program. In this way, the ministry to develop a strategy to make the system NE MIS offers an entry point to build a social reg- equitable for persons with similar levels of disabili- istry that could be harnessed to quickly expand the ties. program in response to shocks or help target other benefits to the poor in Albania.44 The disability assessment reform was coupled with a change in benefit amounts, but these changes Disability assistance program were not informed by an analysis of the additional costs of disability. Globally, there is broad agreement Albania has committed to reform its disabil- that disability benefits should be calculated in a way ity assessment system and, following signifi- that enables persons with disabilities to afford both cant investments, the system is now functional ordinary and disability-related goods and services although with limited coverage. Albania embarked necessary to escape poverty and participate equally on a reform of its disability assessment system in in the society. The amount of the DA benefit and 2015, transforming it from a medical model to a the personal assistance allowance were not based bio-psycho-social assessment to reflect the new on a rigorous analysis of the extra costs of disability; concept of disability as an interaction of functional the disability benefit was set in relation to the value impairments caused by a disease with psychologi- of the social pension, while the personal assistance cal and social factors.45 After the preparatory work allowance is half the minimum wage. Expert opinion between 2015 and 2017, the assessment method- suggests that the levels of the monetary disability ology was piloted extensively in two administrative benefits seem to be too low, especially for persons units of the Tirana Municipality. Then, it was scaled with moderate and severe disabilities. An analysis Back to table of contents 12 44 The term social registry here refers to a modular database of characteristics and receipts of beneficiaries and potential beneficiaries but does not imply any specific targeting methodology. 45 This is to comply with the United Convention on the Rights of Persons with Disabilities (UNCRPD). The way the disability assessment (DA) is carried out is critical for the lives of persons with disabilities as it is the gate through which anyone who claims disability-related benefits, services or products has to pass. 46 Persons with paraplegia and visual disabilities can choose between the old system (having a “status”) and the new disability assessment system. ALBANIA Social Protection Situational Analysis should be carried out to estimate adequate levels social pension is low, this could significantly increase of disability benefits and personal assistance allow- over time given current trends in the pension system. ance. In parallel, other benefits to which people This raises possible future fiscal concerns. with disabilities should be entitled (assistive devices and technologies, and sanitary hygiene packages) An energy subsidy provides support to vulnerable tend to not be provided due to a lack of budget or households, although available analysis suggests unclear criteria. that it is poorly targeted. The Government intro- duced an energy subsidy in the form of a cash trans- Additionally, complementing the provision of cash fer (currently Lek 640 or around 5 EUR) in 2006 and benefits with social services that are supported by a top-up in 2015, for a total benefit of Lek 1,288 case management would help promote the inde- per month (or around 10 EUR). These vulnerable pendence and social inclusion of persons with households are defined as beneficiaries of the NE disabilities. For persons with disabilities to be able and DA programs, including those under the “status to live an independent life, they may need proper system,” old-age pensioners and government support guided through case management ser- workers whose salary was less than Lek 35,000 vices. At the moment, social workers at the local per annum (or 288 EUR), without other employed level are responsible only for administering the household members. To claim this subsidy, benefi- files of and distributing the disability payments to ciaries must submit their electricity bill from the pre- persons with disabilities. The Assessment Commit- vious month. However, based on the latest analysis tees have a limited role in identifying the needs of (2017), the coverage of the energy subsidy is low, the persons: they only check some generic services reaching only 22 percent of the poorest quintile persons with disabilities may need, without provid- based on the current eligibility criteria, and poorly ing concrete information on their type and without targeted to poor or energy poor households. following a person-centered approach. The role of both the Committees and the social workers should be refined to ensure case management is provided. This would include: (i) assessment of individual needs and desires in the areas of life that are essential for independent living; (ii) preparation of an individual support plan; (iii) referral to different support ser- vices to ensure the implementation of the plan; and (iv) monitoring of the implementation of the plan. Such as shift toward case management for persons with disabilities would be supported by, and con- sistent with, the ongoing reform of social services (see section below). This includes the introduction of a case management system that aims to enable social workers to assess the full range of needs and vulnerabilities faced by households and individuals. Other social assistance programs The pension system introduced a social pension for all individuals who did not qualify for a contrib- utory pension in 2015 (see Pensions below). This social pension is means-tested and is provided to those older than 70 years who have been residents in Albania for at least the last five years. The social pension amount is equal to the partial pension calculated at 15 years of insurance pegged to the minimum wage. While currently the number of indi- viduals who do not qualifying for a contributory pension is moderate, and thus the demand for the Back to table of contents 13 ALBANIA Social Protection Situational Analysis Social services Albania is in the process of reforming social services to provide a broader range of services in an equitable, efficient and sustainable manner. Initial steps included putting in place the main pillars of legislation for social services, launching a dedicated Social Fund, and establishing a management information system for beneficiaries of social services. While promising, further investments in strengthening the systems and procedures to support the planning, delivery, monitoring and evaluation of social services are required to assure the quality, relevance and continuation of services across municipalities. Further investments are also required in case management to assist the Ministry of Health and Social Protection and to respond to the needs of individuals, their families and communities in a more integrated manner. Social services are central to helping the poor and this reform was set out in the 2016 Law on Social vulnerable realize their full potential and promote Care Services, which extends the menu of social social inclusion; however, to date, access to social services beyond the traditional use of care insti- services in Albania has been limited. Social services tutions to services provided in communities and play a key role within the social protection system, families. The law clarifies the roles and responsibil- helping individuals and families overcome risks and ities of the local and central governments (MoHSP, improving their wellbeing. For example, for persons State Social Services and Social Services Inspector- with disabilities to be able to exercise their right to ate), establishes a new financing mechanism (Social an independent life, they need access to both ser- Fund) and allows, among other innovations, for the vices for the general population and support ser- procurement of non-public providers of social ser- vices specific to their disability. Children, adoles- vices. While the adoption of this law is an important cents and the elderly often face particular risks and step forward, gaps remain, such as developing the vulnerabilities that require specific social services, methodology for the Social Services Inspectorate such as child protection and foster care for children, to inspect the quality of social services and for the and home-based care and support for the elderly. State Social Services and local government units to To date, the coverage of social services in Albania monitor the performance of and revise the quality has been very low and unevenly distributed. A recent standards for some social services (such as, com- mapping carried out by the United Nations Devel- munity-based services or specialized services for opment Programme (UNDP) found that 53 percent persons with disabilities). The 2016 Law on Social of beneficiaries access social services provided by Care Services also provides scope for local gov- public institutions, 27 percent by non-public insti- ernment units to contract non-public providers to tutions and 20 percent by mixed institutions. Within deliver social services. To date, however, this provi- this broad trend, the mapping drew attention to the sion has not been used due to a lack of guidelines uneven coverage of and access to social services, and regulations, including on the pricing of social with the numbers and types of service providers services. varying significantly across the country.47 A new financing mechanism aims to sustainably The government has recently taken steps to increase social services that are responsive to local strengthen the legislative framework for social ser- needs and promote equitable access. Within the vices; while an important step forward, some gaps devolved system of governance in Albania, financing remain. The MoHSP recognizes the important role of social services has historically been the respon- that social services play in promoting social inclu- sibility of local government units, with additional sion and is committed to improve access to these financing from the central government for national services across the country, with support from the or specialized services. To date, only 6 percent of United Nations Children Fund (UNICEF) and, more the total central government spending on social recently, the European Union. The groundwork for protection has been allocated to social services, Back to table of contents 14 47 United Nations Development Programme. 2021. Social care services in Albania: distribution and beneficiaries in figures - May 2021. Powerpoint presentation. Tirana. ALBANIA Social Protection Situational Analysis as discussed in the section above. Local govern- management. The 2016 Law on Social Care Services ment units, given their mandate, are an important mandates local governments to establish a separate source of financing for social services, particularly in Needs Assessment and Referral unit. Social workers larger, better-off municipalities.48 In recognition of within this unit are responsible to assess the needs this fact, and in an effort to ensure equitable access of individuals and their families and support them to social services, the Social Fund was designed to to access benefits and services, as required, through allow every municipality to develop new social ser- counseling, mediation and referrals. On this basis, vices with the costs partially covered during the the law offers an opportunity to introduce a case first three years of implementation (90 percent of management approach to social services, through the costs are covered in the first year, 60 percent in which social workers assess a range of needs and the second year and 30 percent in the third year). To vulnerabilities of a person (or family) and track their date, the MoHSP has awarded 17 grants on a com- referral to different services providers. The design petitive basis to municipalities and 13 qarks (coun- of the MIS for social services aims to facilitate this ties), with plans underway to increase this number transition to case management; a way of working annually. To justify the request for funds, local that is mirrored in the NE Exit Strategy. The strategy authorities are required to identify the needs and envisions the provision of integrated social services prepare operational plans for developing social ser- and employment support to activate NE beneficiar- vices to respond to these needs (Social Plans). With ies (through individuals plans) and the commitment support from the United Nations, a methodology to accompany DA benefits with services for persons for the preparation of these Social Plans has been with disabilities. development and, based on this methodology, all municipalities except one have prepared a plan Furthering the professional development of social although the quality of plans differs widely. Going workers will be enable the success of the current forward, the lessons learned from this early experi- and future reforms. Dedicated efforts are now ence can inform how to ensure the sustainability of required to put the new systems and procedures the financing mechanisms and service delivery and into practice at the local level, supporting staff with overall quality. This includes, among other, estab- the necessary guidelines and instruments to enable lishing unit costs for social services. Strengthening a full assessment of needs, the preparation of indi- the capacity of the State Social Services to support vidual plans and coordination among different local-level planning and other related processes will stakeholders. This shift draws attention to ensure be central to these efforts as, in the absence of ded- that social workers have the knowledge, skills and icated support measures for local authorities, the experience to carry out these functions. Social new financing mechanism may be unevenly utilized work is a relatively young profession in Albania and and with only a limited impact. demand for social workers has been accelerating in recent years. Curricula are, however, largely based As these reforms take root, investing in the systems on best practices and experiences from developed and procedures that will ensure the quality and countries, while little local knowledge from Albania cost effectiveness of services nationwide will be is incorporated and practical experiences during increasing important to the success of this reform. study is low according to international standards.49 The MoHSP has put in place a management infor- Licensing or certification of social workers could mation system (MIS) for the beneficiaries of social help ensure a minimum standard of quality and services, which is currently being populated. Once education. In-work supervision and support, as well in use, this MIS will help ensure better accountability as opportunities for career development, continued of the way funds are used and better coordination education and recertification, can support staff in among the types of support a person may need. their work and assist with maintaining or increasing It will also create a monitoring system that would standards of services. inform any future legislative and implementation policy changes. Investments in the MIS should be accompanied by the continuous evaluation of the quality of social services to enable ongoing improve- ments to be made, as necessary, by the responsible central-level agencies and local governments. The social services reform also introduced the basis to provide integrated social services through case Back to table of contents 15 48 Ymeri, Sabina. 2018. A review of local level budget spending on social care services. Tirana: United Nations Development Programme. 49 Dhembo, Elona, Bree Akesson and Lirondel Cheyne-Hazineh. 2020. “Social Work Education in Albania: A Developing Landscape of Challenges and Opportunities.” European Journal of Social Work 23 (5): 862-75. ALBANIA Social Protection Situational Analysis Pensions In 2015, Albania introduced important parametric reforms to its Defined Benefit pension system, improving its long-term sustainability. Currently, the share of pension contributors is low, raising concerns about the future wellbeing of the elderly. These concerns may be addressed, in part, through the relatively new social pension. Despite some progress, the fragmentation of the system still raises equity challenges. Moving forward, it will be essential to analyze and understand the long-term implications of the changes on the system’s adequacy, sustainability and coverage, for the old-age pension as well as special regimes. Recent reforms have improved the pension sys- Modifications were also made to special pension tem’s long-term sustainability. In January 2015, regimes. The government’s supplementary pen- Albania introduced a comprehensive pension reform sions for constitutional functionaries were revised package that aimed to improve the fiscal sustain- to adjust the balance between contributions and ability of the system, strengthen the link between benefits and to reduce the government subsidy. contributions and benefits, and improve coverage. The retirement age for members of parliament and These reforms were carried out in three main areas: ministers was increased from 55 years to 60 years, (i) parametric reforms to the existing Defined Benefit with an increase in benefits and modifications on (DB) scheme; (ii) adjustments to special regimes; benefit calculations. In addition, the retirement age and (iii) introduction of a non-contributory social for underground miners was reduced by five years pension for all individuals who did not qualify for a (from 60 to 55 years), with an increase in the contri- contributory pension (for more information on this bution rate by 5 percent of the gross wage. social pension, see section above on “Cash transfers to support the poor, the vulnerable, and persons with disabilities”). In terms of parametric changes to the DB system, the pension formula was modified to the sum of a basic pension floor plus a supplement.50 The earnings-related part of the pension is calcu- lated as 1 percent of the average indexed wage over the individual’s entire career for every year of contri- bution. The pension ceiling was lifted; the minimum contributory wage (Lek 26,000) was unified with the official minimum wage; the maximum contribu- tory wage was indexed to average wage increases; and the pension indexation was limited to the infla- tion rate. The effective accrual rate (pension amount for one year of service, as a share of the average career wage) ranges between 1.1 for high-income earners to around 1.7 for low-income earners with “full” service period. Such a formula assures a certain level of redistribution toward lower income brack- ets and applies the recommended valorization and indexation patterns. The retirement age is also expected to gradually increase to 67 years by 2056 (from 65 years for males and 60 years and 8 months for females). Back to table of contents 16 50 The basic pension corresponds to the amount of the social pension prorated by the number of years contributed with respect to the total number of “full” insured years defined in the law. In 2016, the minimum insured years stood at 15, with early pension available with “full” service of 37 years, increasing by four months each year until 40 in 2029. ALBANIA Social Protection Situational Analysis Table 3: Pension parameters in Albania 65 years for males and 60 years and 8 months for females (gradually increasing to meet at 67 years by 2056), with 15 years of contribution. Early pension: A reduced pension may be paid up to three years before Retirement age the normalretirement age, with at least 37 years of contribution (gradually rising by four months a year until reaching 40 years in 2029). The pension is reduced by 0.6 percent for each month it is claimed before the normal retirement age. The monthly pension is the ratio of the insured person's coverage period to the coverage period required by law multiplied by the amount of the old-age social pension, plus 1 percent of the insured person's average Pension calculation covered earnings for each year of coverage. The minimum monthly old-age pension is the monthly old-age social pension. Valorization The maximum contributory wage is indexed to average wage increases. Indexation post-retirement Indexation of pensions was limited to the inflation rate in the 2015 reforms. Contributions in at least 75 percent of the tenure since age 20 and at least Eligibility for disability pension one year in the last five years before disability. Same calculation as old-age pension. Full disability receives full pension plus a supplement of Lek 3,300 (or Level of disability pension around EUR 27). Partial disability receives 50 percent of the full disability pension plus a supplement of Lek 2,200 (or around EUR 18). The deceased received or was entitled to receive a social insurance old-age or disability pension. Eligible survivors include a widow(er) caring for a dependent child younger than age 8 years; a widow(er) with a disability; a widow 55 years or older or Eligibility for survivor’s pension a widower age 60 years or older; dependent children younger than age 18 years (25 years if a university student; no limit if disabled from childhood); dependent parents and grandparents 65 years or older who lived with the deceased for the last 12 months; and dependent grandchildren. The widow(er)'s pension ceases upon remarriage. Spouse's pension: 50 percent of the social insurance old-age or disability pension the deceased received or was entitled to receive. Orphan's pension: 25 percent of the social insurance old-age or disability pension the deceased received or was entitled to receive is paid to each eligible child; 50 percent for a full orphan if there are no other eligible dependents. Level of survivor’s pension Other eligible survivor's pension: 25 percent of the social insurance old-age or disability pension the deceased received or was entitled to receive is paid to each dependent. The maximum combined survivor benefit is 100 percent of the social insurance old-age or disability pension the deceased received or was entitled to receive; 50 percent if the surviving spouse is working or receiving a pension in his or her own right. 21.6 percent of gross salary: 12.8 percent by employer and 8.8 percent by employee. The minimum monthly earnings used to calculate contributions are the legal Contribution rates monthly minimum wage. The legal monthly minimum wage is Lek 24,000 (or around EUR 198). The maximum monthly earnings used to calculate contributions are Lek 105,850 (or around EUR 872). Source: National Legislation and Social Security Programs Throughout the World, Europe 2018. Back to table of contents 17 ALBANIA Social Protection Situational Analysis Coverage Pension coverage has remained very high in Albania. 10,871 (EUR 89), with top-ups provided depend- In 2020, there were 605,000 individuals 60 years ing on the insured person’s coverage period and and above, while the number of pensioners stood at earnings (accrues 1 percent per year). The minimum 651,000 of which 529,000 were old-age pension- social pension in 2020 represented 41.5 percent of ers (that is, people 65 years and above). In contrast, minimum wage and 20.3 percent of average gross contribution coverage is currently low, implying that wage, which is considered adequate. The average the coverage of pensioners will fall to low levels. social pension in 2019 was well above the minimum While there was close to full contribution coverage pension, at 41 percent of average gross wages. This of the labor force in the pension system in 1994 share was close to the EU27 average in 2016 and is (almost all employed individuals were also social higher than in other countries in the region (Figure 7). insurance contributors), this has been decreasing While the minimum and average pensions are con- over time. In 2019, the coverage of contributors sidered adequate today, it is unclear how the reform (both urban and rural) stood at 67 percent of the may change adequacy. Since only around 9 percent labor force, unsurprisingly low given that close to 30 of adults save for old age voluntarily, ensuring ade- percent of workers are estimated to be informal. The quacy of the pension system moving forward will be introduction of the non-contributory social pension especially important. is expected to strengthen the future pension cov- erage of poor and vulnerable workers who are cur- As seen in Table 3, the survivor’s pension ranges rently outside the system. However, there is a need between 25 percent (for eligible survivors) and 50 to understand to what extent the social pension percent (for the spouse) of the old-age or disabil- will reduce the gap in coverage among pensioners ity pension of the deceased. The disability pension and its fiscal implications, which could be potentially follows the same calculation as the monthly old-age large. pension, and it adds a supplement of Lek 3,300 or Lek 2,200, depending on the disability status (full or partial). Currently, the assessment for the disabil- Adequacy ity pension is carried out by the ISS and do not use the new disability assessment system, which the Given its fragmented system, the adequacy of each MoHSP has introduced. Integrating these systems, pension regime must be considered separately. or at least using the same methodology, could help The monthly minimum old-age pension is Lek ensure equity within the social protection system. Figure 7: Average pension to average gross wages 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% LV IE BIH RS UK BIH FED BG LT HR SI EE RO NL MNE KSV SE MKD SRB CZ HU ALB DK BE DE EU27 EA EA s SK PL MT FR AT NO LU FI PT ES IT CY EL Source: 2018. European Commission, Public pension agencies in Western Balkan countries. Back to table of contents 18 ALBANIA Social Protection Situational Analysis Expenditure and sustainability Albanian pension expenditures are relatively low Given the already-high contribution rates, it will but a sizeable deficit must nevertheless be financed be difficult for workers to significantly cover future from the budget. The Albanian pension system is gaps in funding. Albania’s total contribution rate a DB system funded by contributions, with state of 21.6 percent is close to the European average funding covering the deficit. While total pension of 21 percent and higher than the Organisation of expenditure increased between 2012 and 2016, it Economic Co-operation and Development (OECD) remained at around 7.4 percent of GDP until 2019, average of 18 percent (Figure 8). However, given the with a preliminary share in 2020 estimated at 7.7 very low remunerations of Albanian workers, even if percent. This places Albania at the lower end of the contribution shares are not low, they are not enough spectrum compared with Western Balkan countries to pay for the total amount of pension benefits and the EU27 whose average expenditures stand given by the system. As such, unless productivity at 12 percent of GDP. However, it is noteworthy and earnings increase, it will be difficult for workers’ that Albania’s deficit costs the budget around 1.7 contributions to cover a larger share of the pension percent of GDP. costs. Taken together, given the significant reforms that took place in 2015, it will be essential to analyze Albania has one of the lowest support ratios in the long-term implications of the changes on the Europe. Given the high coverage of pensioners and system’s adequacy, sustainability and coverage for low coverage of current contributors described both the old-age pension and special regimes. above, Albania presents one of the lowest support ratios (number of contributors per 100 beneficiar- ies) of all the countries in Europe. Despite the 2015 reforms to control the number of early pension ben- eficiaries, informality and demographic trends have pushed this ratio down to 118 in 2019 and 113 in 2020 due to COVID-19’s impact on unemployment. If the support ratio continues to deteriorate, the system's sustainability and ability to pay relevant pensions in the long run will be compromised. Figure 8: Social security contribution rates for OECD and European Countries 35 30 25 20 15 10 5 0 Italy Israel Japan France Serbia Chile Mexico Belgium Turkey Finland Korea Greece BIH RS Kosovo Romania Canada Germany Sweden Iceland Croatia Poland Albania Bulgaria Hungary Australia Denmark Montenegro Luxembourg Switzerland Netherlands BIH Federation North Macedonia Slovak Republic Russian Federation Source: OECD. 2019. Pensions at a Glance (Edition 2018). Paris. Back to table of contents 19 ALBANIA Social Protection Situational Analysis Employment and active labor market programs Albania’s employment agency has recently reformed its active labor market programs, and the reforms look promising but will take time to demonstrate results. Spending on labor market policies, however, continues to be low and only a small share of registered unemployed receives unemployment benefits or takes part in activation measures. The new monitoring and evaluation frameworks introduced will allow for more adaptive management of such programs, but the lack of a functional management information system poses a barrier to implementation. The generosity of unemployment benefits is low relative to the average wage, while social security contributions collected for the benefits are only partially spent on regular unemployment benefits. The National Agency for Employment and Skills new law redefined what can be financed as part of (NAES), subordinate to the Ministry of Finance active labor market programs (ALMPs) to include and Economy, coordinates the implementation of self-employment programs and business incuba- active and passive labor market policies of Albania. tors—thus facilitating an outsourcing ALMP deliv- The National Employment and Skills Strategy 2019- ery to non-public providers. It also redefined youth 2022 is the guiding policy document. This strategy from 15-18 years to 15-29 years. In 2020, three focuses on enhancing the institutional environment decrees of the council of ministers (DCM) introduced by prioritizing efforts such as reforming the design eight active labor market policies: five policies were of active labor market policies, implementing an designed on the basis of previous evaluations and effective monitoring and evaluation framework international best practices and three policies were and providing training based on a unified quality designed in response to the COVID-19 pandemic.54 assurance framework. Donors have made signifi- cant contributions toward financing and reforming Expenditures for active labor market policies rela- these labor market policies. Since 2015, the Euro- tive to GDP are low in Albania compared with the EU pean Union has been providing support, while the and the Western Balkans. The directorate respon- Swiss Agency for Development Cooperation has sible for employment services support and opera- supported the NAES with projects implemented by tions spent EUR 12.2 million in 2019 (0.09 percent of SwissContact and UNDP, respectively.51 The German GDP), the first increase in expenditures since 2016, development agency Deutsche Gesellschaft für when spending amounted to EUR 13 million (0.12 International Zusammenarbeit (GIZ) has supported percent of GDP). This budget is allocated toward the employment agency around the implementa- three strands: employment promotion programs, tion of vocational training over the last four years. vocational training courses and unemployment benefits. In 2019, unemployment benefits made Recent legislative efforts have laid the institutional up one third of total expenditures, while spending foundation for effective and evidence-based labor on ALMPs accounted for 17.8 percent (vocational market policies. In 2021, the government published training) and 23.4 percent (employment promotion). a National Action Plan for Persons with Disabilities, Only 0.021 percent of Albania’s GDP is allocated to which aims to increase the labor market participa- ALMPs, significantly lower than comparable coun- tion of the 2.5 percent of the population who are tries in the European Union or the Western Balkans disabled.52 In March 2019, the new Employment (Figure 9). In 2020, the budget allocated to employ- Promotion Law53 was adopted, creating a novel ment promotion programs increased by almost 50 Social Employment Fund to finance employment percent, from Lek 390 million to Lek 590 million (or programs for persons with disabilities and paving from around EUR 3.2 million to EUR 4.4 million). the way to establish the NAES (which replaced the However, actual spending on these programs is National Employment Service). The NAES manages considerably below the allocated budget.55 This employment services and programs as well as voca- underspending arises from a combination of the tional education training (VET). Additionally, the impacts of COVID-19 pandemic on general services Back to table of contents 20 51 Ministry of Finance and Economy (MoFE). 2019. “National Employment and Skills Strategy 2014-2020, Annual Progress Report 2018.” Tirana. 52 Ministry of Health and Social Protection (MoHSP). 2021. “National Action Plan on Persons with Disabilities.” Tirana. 53 The Employment Promotion Law 15/2019 dated 13.03.2019. See Annex 1 for more detailed information on changes introduced. 54 See Annex 2 for detailed information on each ALMP, the relevant legislation and target group. 55 In 2020, only 12.1 percent, or Lek 71.5 million, was disbursed despite a planned budget for active labor market programs (excluding vocational training) of Lek 590 million. It appears that the budget was used to cross-subsidize higher expenditures for unemployment benefits. ALBANIA Social Protection Situational Analysis Figure 9: Expenditure on labor market policies as Active labor market programs were redesigned percent of GDP, 2018 based on past programs and international best 1.4% Total LMP (incl. administration, placement practices, but coverage remains low. Five new and related services) ALMPs were introduced throughout 2020, namely 2018 Expenditures (% of GDP) 1,19% 1.2% Active LMP (including Vocational Training) a wage subsidy, an on-the-job training program, 1% an internship program, a community employment Passive LMP (unemployment benefits) program and a self-employment program. Addi- 0.8% tionally, a wage subsidy for formal workers and a for- 0,65% 0.6% malization subsidy for previously informal workers 0,48% 0,43% 0,42% were introduced as a response to the COVID-19 0.4% 0,36% pandemic. Combined with beneficiaries from the old employment promotion programs, a total of 0.2% 0,10% 0,08% 4,141 jobseekers, or 4.7 percent of registered job- 0.0% seekers, took part in ALMPs other than vocational training. This represents a significant decline rela- 7 E ) H ia ia vo ia 19 -2 TE Bi on rb an tive to previous years; the number of beneficiaries so 0 EU Se 7S lb ed (2 Ko A ac o had been increasing consistently and in 2019, rep- gr M ne th resented 7.5 percent of the registered unemployed te or on N M (5,338 beneficiaries). More than a third of all benefi- Sources: EU-27/7STEE: Eurostat; North Macedonia: admin- ciaries were enrolled in COVID-related subsidies by istrative data; Kosovo: NESS Progress Report 2018; Albania: NAES administrative data. Note: 7STEE refers to the seven the end of 2020, despite only having been intro- small transition economies of Europe, namely Bulgaria, Croa- duced in September 2020. The largest non-COV- tia, Estonia, Latvia, Lithuania, Slovak Republic and Slovenia. ID-related programs were the internship program Comparable data is only available for 2018, whereas the text targeted at recent graduates and a wage subsidy references newer data from 2019. for participants of vocational training: 717 and 602 delivery, the reforms of the programs—including the beneficiaries, respectively. Given the impacts of timing of their introduction in late 2020 and push- COVID-19 on the labor market, it is unsurprising back from employment offices and employers.56 that take-up of some of the ALMPs related to sub- As the reforms take hold, the allocated funding is sidized employment was low. expected to be fully utilized. Active labor market programs do not yet ade- Reductions in the number of jobseekers have led quately cover the most socially vulnerable groups. to a comparatively low caseload for counsellors, The largest groups of jobseekers who participate although regional disparities exist. Staff at NAES in ALMPs (other than vocational training) are youth are responsible for the registration of jobseekers, and short-term unemployed. In 2019, 69 percent intermediation, counseling services, providing guid- of recipients of ALMPs had been unemployed for ance, and preparing and checking eligibility docu- less than six months and 60 percent were youth up ments for unemployment benefits. In 2020, there to the age of 29 years. In contrast, only 17 percent were 88,393 registered unemployed and 329 coun- were long-term unemployed; 14 percent of partici- selors, translating into a caseload of 269 jobseek- pants were either current or former NE recipients; 4 ers per counselor. While this is higher than those percent were from the Roma and Egyptian commu- of European countries which average between nity; and only 2 percent were persons with disabil- 100 and 150, it is significantly lower than those ities. The newly introduced programs may allow for of regional counterparts, which average between a stronger focus on vulnerable groups, but contin- 600 and 1,100 jobseekers per counselor.57,58 Within uous monitoring and evaluation will be required to Albania, however, the number of counselors per ensure accessibility to those furthest from the labor registered jobseekers differs significantly, ranging market. The employment promotion law introduced from 195 in Berat to 667 in Elbasan. In 2019, quotas with an aim to (i) increase the participation employment offices registered 50,785 vacancies of persons with disabilities in the labor market and and 30,391 jobseekers found employment due to (ii) finance more ALMPs for this target group using intermediations. In addition, each newly registered the Social Employment Fund. The latter is financed jobseeker is instructed to participate in a two-week by employers who do not adhere to quotas but is soft-skills training course, which also helps to profile not yet operational, as it is unclear who is to collect the participants. the levy from firms who do not employ the assigned minimum number of persons with disabilities.59 Back to table of contents 21 56 Ministry of Finance and Economy (MoFE). 2021. “National Employment and Skills Strategy - Annual Progress Report 2020,” no. June 2021. Tirana. 57 Scharle, Ágota. 2018. “Comparative Study on Western Balkan’s PES Performance.” Bosnia and Herzegovina. 58 European Commission. 2015. “Assessment Report on PES Capacity.” 59 The law states that employers are to hire one person with disabilities if they have more than 25 employees and an additional one for every 50 employees thereafter. ALBANIA Social Protection Situational Analysis Vocational training has good coverage, but many lenges in transitioning from education to work. The beneficiaries are youth who have only com- GIZ tracing study in 2017 found that only 41 percent pleted secondary education. Almost a fifth of the of graduates from vocational secondary schools budget allocated to employment services is cur- were in a work relationship, and a quarter were not rently expended on providing vocational training in education, employment or training. To ensure courses. In 2019, a total of 8,818 unemployed (or skills are aligned with the needs of the labor market, 12.4 percent of all registered jobseekers) graduated the authorities need to ensure a standardized col- from one of the courses publicly provided in one lection and dissemination of detailed labor market of ten Vocational Training Centers (VTC). In recent information on occupations and in-demand skills, years, a disproportionate share of men participated and employer and worker organizations need to be in vocational training, whereas women were more more closely involved in VET. likely to benefit from other ALMPs such as wage subsidies, internship programs or on-the-job train- The redesign of ALMPs have introduced improve- ing. A significant number of young adults are using ments but coverage and generosity remain low. the 2- to 6-month courses as a shorter alternative The reform of the ALMPs, and the broader institu- to upper secondary school or vocational education; tional arrangements for their delivery, is very prom- however, it is unclear to what extent these courses ising. However, considering that most active labor are aimed toward continued professional education. market policies were only established in 2020, it Most VTCs are located in urban centers (such as will likely take at least two years of implementa- Tirana, Durrës or Vlorë), compounding the existing tion before their performance becomes apparent, educational quality deficits for the rural population. at which point the first programs are to be evalu- An independent evaluation found that only around ated. All labor market policies continue, however, to half of VTC graduates were employed the following suffer from significantly low coverage and, where year; however, most participants were satisfied with applicable, low generosity. ALMPs other than voca- the quality of the courses. tional training have covered less than 8 percent of registered jobseekers and despite an increase in Continued vocational education reaches a relatively the budget by almost 50 percent from the previous small number of students and does not provide year, coverage is unlikely to increase due to higher enough work-based learning. Currently, only 18 expenses per beneficiary in the adapted measures. percent of students enrolled in upper secondary Increasing coverage requires both an increase in education attend vocational programs, much lower the budget allocated to ALMPs and investments than the Western Balkans average of 58 percent.60 in the human resources and other systems required Significant reforms (mostly legislative) have been to support their effective implementation. The gen- implemented in recent years to improve the quality erosity of wage subsidies is too low to generate and image of VET,61 although the country’s novel effective take-up, as the program currently only legal VET framework has not yet been adopted subsidizes 4 of 12 months’ salary while having strict to the full extent.62 Meanwhile, challenges remain, eligibility criteria for firms, such as not having fired including: (i) a lack of standardization in regard to anyone in the four months prior. the amount and type of work-based learning; (ii) little involvement of businesses and labor unions Unemployment benefits have low regular coverage, in shaping the curricula; and (iii) difficulties for VET and expenditures are not transparent. In recent institutions to establish partnerships with employ- years, unemployment benefits have been paid out ers interested in providing training. Many of the to less than 5 percent of the registered unemployed, implementation challenges are due to the limited and the monthly benefits are rather fixed at half the involvement of the private sector when formulat- minimum wage, providing little incentive for formal- ing laws given that their enactment depends on the ization, upskilling or better job matching. This fixed participation and resources of private enterprises. benefit provides jobseekers with a relatively small Reforms such as the new VET Law in 2017 depend replacement rate relative to those of unemployment on the close involvement of the private sector in benefits in comparable countries, although it also the design and delivery of training programs, but has a relatively low contribution rate (Figure 10). An many of the mechanisms to channel the input from individual who earned the gross average wage only the private sector are either not functioning or are receives 25 percent of their previous salary. In 2019, non-existent.63 As a result, the skills taught at many only Lek 504 million (or around EUR 4.2 million) of vocational schools are not needed by employers, the estimated collected contributions of Lek 3,092 and graduates of VET schools face significant chal- million (or around EUR 25.5 million) went toward the Back to table of contents 22 60 Sources: Eurostat: EDUC_UOE_ENRS04, For Albania: INSTAT Database. Pupils enrolled on upper secondary by type of school 2012-2020. For Kosovo: KAS askdata. Number of pupils in upper secondary education, 2015-2020. Note: data refer to 2018. 61 Such as the Employment Promotion Law from 2019, the Albanian Qualifications Framework Law from 2018, or the new Vocational Education and Training Law from 2017. 62 United National Development Programme (UNDP). 2020. “Review of Albania’s Vocational Education and Training System Review of Albania’s Vocational Education and Train- ing System.” Tirana. 63 Examples include the non-functioning National VET Council or the establishment of so-called development units, whose responsibility is to “set up a cooperation mechanism with private companies to ensure availability of sufficient practical skills acquisition possibilities for students in work-place environments.” (Source: UNDP 2020, pp. 9, 10, 103.) ALBANIA Social Protection Situational Analysis Figure 10: Albania’s replacement rate of unemployment benefits is among the lowest in the region 90% Social Seurity Contributions 80% 2.5% Replacement Rate 70% 2.0% 60% 50% 1.5% 40% 30% 1.0% 20% 0.5% 10% 0% 0.0% o a ia ia H E ia ria a tia ia a a ni ni ni vi gr TE Bi on rb en ak a oa t a ua to ne lg La Se ov 7S lb ov ed Cr Es th Bu te A Sl Sl ac Li on M M th or N Minimum Wage 67% Average Wage 100% Average Wage Employer + Employee Contribution Rate (right axis) Sources: Albania: Institute of Statistics (INSTAT), Serbia: Statistical Office of the Republic of Serbia, BiH: Federal Bureau of Statis- tics Bosnia and Herzegovina, North Macedonia: MAKSTAT and OECD for the remaining countries. Note: The graph indicates the replacement rate for three different levels of gross wages in the given country assuming a single indi- vidual with no children or other benefits. The replacement rate measures what share the unemployment benefit is relative to the beneficiary’s previous income. regular unemployment benefit scheme. At the same country and the lack of an effective labor market time, almost Lek 2,164 million (or around EUR 17.8 information system which can provide regional million) was paid out as special measures, such as to offices with the relevant data. On the other hand, workers of the oil, mining and metallurgy industries while outsourcing to non-public providers was or former members of the military. made possible by the employment promotion law, the implementation of such measures has been hin- The lack of an updated management information dered by missing bylaws. system (MIS) prevents real-time adaptive manage- ment. An analysis of the requirements of a newly Collaboration with the Ndhima Ekonomike (NE) has designed MIS was finalized and procurement was improved, but beneficiaries continue to need lay- completed in 2020, and testing and piloting of the ered support. Support from the NE is limited to a system has begun. Until the system is fully func- period of five years and while benefiting from the tional, data availability is significantly limiting poli- program, individuals are required to register with cymakers’ ability to manage enrollment into ALMPs the employment office and actively look for employ- effectively, as figures indicating the constraints to ment.64 At the beginning of 2020, the MoHSP increasing coverage are not accessible on an aggre- approved an Exit Strategy for NE beneficiaries, gated basis. While the agency has introduced new highlighted the need for inter-institutional mecha- monitoring and evaluation frameworks based on nisms and emphasized active labor market policies international best practices, efforts such as impact that prioritize employment of NE beneficiaries.65 evaluations or tracing of beneficiaries will be diffi- The NAES thus plays a central role, together with cult to implement without a functioning informa- the MoHSP, in supporting the movement of NE tion system. beneficiaries into the labor market. This is because NE beneficiaries often require social services and Vocational training is not demand-driven and leg- employment support to address their complex vul- islative barriers prevent outsourcing of services nerabilities. Such integrated service provision is rec- to non-public providers. While the coverage of ognized in the NE Exit Strategy. To date, implemen- jobseekers receiving vocational training has been tation of the NE Exit Strategy has been limited due increasing, the most successful schemes closely to the difficult financial and social context created involve employers in aligning training programs by the COVID-19 pandemic and technical complexi- with the demand for workers and skills. Effectively, ties of these measures, which require special focus of there is little involvement of employers in shaping the MoHSP and strong coordination with the NAES. curricula or providing the training. Partly, this is due to fragmented labor market demands within the Back to table of contents 23 64 The NE provides time-bound support of 5 years to beneficiaries (with the exception of some categories of people, such as people under 16 years of age and caregivers), which makes the provision of integrated services to promote their employment all the more urgent. 65 The Strategy represents one of the DLIs already achieved under the World Bank-financed Social Assistance Modernization Project. The aim of the Strategy is to support the NE beneficiaries to move from the program into the labor market through a comprehensive set of measures (from employment subsidies to training or communication campaigns) and is accompanied by an action plan. ALBANIA Social Protection Situational Analysis Learning from the COVID-19 response The double shock of the earthquake that hit Albania in November 2019, followed by the COVID-19 pandemic, erased much of the progress on poverty reduction. Government efforts to mitigate income losses through fiscal stimulus included higher social assistance benefits, extended unemployment insurance and wage subsidies for the formal sector. While government response to the crises mitigated job destruction and provided some relief, measures were not always effective in protecting incomes of the vulnerable, espe- cially those in the informal sector. The crisis has highlighted the need to strengthen the social protection system to provide rapid support to households negatively affected by economic shocks. Like other countries around the globe, Albania har- the rationale for such increases was not always nessed its social assistance programs to protect clearly articulated or justified. Given that the NE the poor from the COVID-19 pandemic. Within appears to be well targeted, doubling the value of its broader response to COVID-19, the govern- the payments provided an effective way of reaching ment adopted measures specifically designed to those who were likely already poor and supporting protect the most vulnerable parts of the population them during times of income losses and increased from the economic impacts of the crisis. First, the costs of goods and services. However, in Albania, as government doubled the value of the NE benefit in other countries, the rationale for the doubling of for April, May and June 2020 for those who had the benefit for an initial period of three months was applied for the NE up to March 10, 2020,66 reach- not set out in relation to a specific objective or anal- ing 63,510 beneficiaries; temporarily eliminated ysis. This suggests that the basis upon which the the need for in-person recertification every three value would increase in response to shocks should months; and allowed applications to be submitted be set out in advance and based on analysis of ade- electronically or through the Post Office. Because quacy to achieve the stated objectives. of these changes, the number of NE beneficiar- ies increased by 11 percent, from 62,016 to 69,073 However, while some effort was made to provide families between March and July 2020. Second, the support to additional poor households, the full government approved in the second half of April range of options through the NE were not har- 2020 a one-off benefit (Lek 16,000, equivalent to nessed. The low coverage of the NE left many poor EUR 132) for all the families that had applied to the households exposed to the negative economic NE between July 2019 and April 2020 and had impacts of the COVID-19 pandemic. In recogni- data in the MIS, with 4,524 families receiving this tion of these gaps, the government introduced two payment.67 Finally, an inter-ministerial committee measures that aimed to specifically reach addi- chaired by Ministry of Defense was established to tional poor people: (i) providing a one-off payment organize and deliver food and other support items to those whose data were in the MIS but who were for about 600,000 individuals identified by local not eligible for support; and (ii) delivering food and governments as vulnerable. Most recently, the NE other support items to about 600,000 individuals benefit was again doubled for the period of January identified by local governments as vulnerable. The to June 2021. first of these actions mirrored those taken by other countries, which used information in the MIS of their The government’s decision to double the NE benefit social assistance programs or their social registries to was an effective response, although this could have provide support to additional households, thereby been better calibrated. The decision to increase the expanding coverage of social assistance support. NE benefit followed a broader trend in the region: The MoHSP also noted an increase in the number other countries in the Western Balkans increased of people applying to the NE, which resulted in a the value of the benefit to existing beneficiaries of natural expansion of the program to those who were their last resort income support programs, although found to be eligible according to the USF. However, Back to table of contents 24 66 The measure was approved through the DCM no. 254 approved on 27.03.2020. 67 Based on the Decision no. 341, dated 23.4.2020 of the Council of Ministers “On some additions and changes to the decision no.305, dated 16.4.2020, of the Council of Minis- ters, “On the determination of procedures, documentation and the amount of financial assistance for current employees and employees dismissed as a result of COVID - 19”. ALBANIA Social Protection Situational Analysis the government opted not to expand the coverage mid-April 2020, additional one-off payments of of the NE to additional poor households using the Lek 40,000 (EUR 329) were made to employees of full range of program procedures. This could have large enterprises that had temporarily closed due to included, for example, proactive outreach, increas- restrictions and to employees of smaller firms which ing the eligibility threshold for the USF and paying were allowed to continue to operate.70 The govern- the regular NE payment (or double payment) to the ment also issued a loan guarantee in the amount of people who received the temporary response. To Lek 11 billion (EUR 90.5 million) to cover employee become more shock-responsive in the future, cri- salaries for a three-month period, with interest rates teria are required to (i) determine how to identify fully covered by the government. people quickly for support when a shock occurs, such as modifying the USF; and (ii) establish the Support was provided to those dismissed due to value and duration of the transfer to be provided COVID19 and additional ALMPs implemented to for existing and new beneficiaries. support re-hiring efforts. In the second financial package in mid-April, Lek 40,000 (EUR 329) was For such a program to respond quickly to a range provided to all employees dismissed from the start of shocks, it needs to be supported by established of restrictions until May 17, 2020.71 Under the second triggers and backed by contingency financing. In package, 173,019 individuals were sent one-off pay- addition to establishing the rules and procedures ments of Lek 40,000, totaling Lek 6.9 billion (EUR within the NE to identify who would receive support 56.8 million).72 Those who were eligible to receive in response to a shock, for how long and at what unemployment assistance received double the level, rules are required to determine when such a amount between April and June 2020; 2,823 job- response would be triggered. In some countries, a seekers benefited from this measure. In addition, response through the social assistance system is three ALMPs were established with a focus on labor triggered by data from the early warning system market reintegration for the unemployed who had reaching a pre-determined level. This approach lost jobs due to COVID-19.73 Two of these programs can be used for localized or larger (national) shocks provided wage subsidies of half the minimum wage and does not require a declaration of emergency to previously formal workers and paid the employ- by the national government. Other countries use ers share of social contributions for the duration of the procedures that have been established within four months for one program and eight months for their disaster risk management system to identify the other. Combined, a total of 1,161 individuals ben- and respond to crises. In both cases, when such a efitted from wage subsidies, with almost all benefi- response is triggered, it is financed through con- ciaries enrolled in the eight-month subsidy (only 30 tingency financing (or a budget reallocation) and of the total beneficiaries received the four-month follows the rules and procedures that are set out in contract and subsidy). The third program aimed at advance, such that support quickly reaches house- formalizing employees by covering the full cost of holds affected by the shock. The MoFE has com- social contributions for 12 months if a self-identified missioned an assessment of disaster risk financing informal employee received a formal employment options, which lays the foundation for further anal- contract. Through this initiative, social contributions ysis of the cost of expanding the NE in response to of 560 individuals were covered in 2020. All three anticipated shocks wage subsidies will be continued throughout 2022 and, up until June 2021, supported 695 workers.74 To prevent the firing of workers, in parallel to the social assistance response, payments were made Finally, while Albania harnessed its unemployment to workers affected by lockdowns and loan guar- insurance system to respond to the COVID-19 pan- antees issued to firms. As part of the first package demic, it took more modest steps than other coun- introduced in March 2020, the government made tries. Over 90 percent of countries in Europe and three monthly payments equal to the minimum Central Asia used their unemployment insurance wage of Lek 26,000 (EUR 214) to employees of systems to respond to the COVID-19 pandemic. businesses which had temporarily closed down as As Albania doubled the amount of unemployment a result of COVID-19 restrictions and had a turnover benefits for three months, other countries went of up to Lek 14 million (EUR 136,000).68 A total of further. Serbia and Croatia, for example, facilitated 65,574 individuals received payments in three instal- procedures to apply for unemployment benefits. ments, with a total of Lek 5.1 billion (EUR 42 million) Latvia and Lithuania expanded unemployment having been disbursed.69 In the second package in benefits for the self-employed and introduced an Back to table of contents 25 68 Council of Ministers Decision No. 254 dated 27.3.2020 (amended), ‘On the procedures for the financial support to the employees of businesses with turnover up to Lek 14 million, economic support and unemployment benefits due to the COVID-19.’ 69 Republic of Albania. 2021. ‘Economic Reform Programme 2021-2023.’ Tirana. 70 Council of Ministers Decision No. 305, dated 16.4.2020, ‘On the procedures for the financial support to the current employees and the unemployed due to COVID-19’ 71 Council of Ministers Decision No. 423, dated 28.5.2020, ‘On the changes and additions to the decision No. 305, dated 16.4.2020, ‘On the procedures for the financial support for current employees and the unemployed due to COVID-19’. 72 Ministry of Finance and Economy (2021). ‘Economic Reform Programme 2021 – 2023.’ 73 Council of Ministers Decision No. 603 dated 29.7.2020, ‘On the procedures, criteria and rules for the implementation of the employment promotion program through the employment of unemployed persons as a result of COVID-19.’ 74 Jorgoni, Elira (2019). ESPN Thematic Report on In-work poverty – Albania, European Social Policy Network (ESPN). Brussels: European Commission. ALBANIA Social Protection Situational Analysis unemployment assistance benefit for the unem- ployed who would not otherwise qualify for the regular unemployment benefit. These experiences suggest that Albania may consider setting out rules that would govern the response to shocks through the unemployment insurance system, including a careful consideration of options to relax some of the stringent eligibility criteria and extend benefit duration. As a result of government responses, Albania’s poverty and economic outcomes appear to have suffered less than expected, although the measures were not always effective in protecting incomes of vulnerable, especially those in the informal sector. Albania’s latest poverty projections suggest an increase of 4 percentage points, as discussed in the section above on poverty and labor market trends. Formal employment had a net increase, whereas total employment fell by 1.8 percent in 2020, showing that the formal sector was more resilient than the informal sector. Meanwhile, labor force participation declined, especially among youth, and unemployment increased steadily since the second quarter of 2020, especially for adults 30-64 years old. Back to table of contents 26 ALBANIA Social Protection Situational Analysis Reform priorities Albania has initiated a range of reforms to improve Building on this progress, this section outlines the adequacy, effectiveness, equity and sustain- reforms in the short, medium and long term that ability of its social protection system, and they could help further strengthen the country’s social should be sustained and furthered. Albania has protection system to address key challenges faced demonstrated a strong commitment to improving by Albanians. The government is already acting the effectiveness and equity of its social assistance on many of these reforms, with a commitment, for programs through the reform of the NE and the example, to expand the DA nationwide, increase the ongoing reform of the Disability Assistance program. value of the NE benefit and improve access to quality A similar commitment to improving the adequacy, social services and employment support. Addition- effectiveness and sustainability of social services ally, as demonstrated by the COVID-19 pandemic, is evidenced by the adoption of the 2016 Law on making the social protection system more flexible to Social Services and recent progress toward local respond to economic and climate-induced shocks level planning and more sustained financing. Simi- quickly and effectively can offer a cost-effective larly, recent legislative efforts have laid the institu- means of protection the poor. Finally, the contin- tional foundation for effective and evidence-based ued high rates of poverty in Albania suggest that labor market policies and these now need to be there may be value in considering extending the NE reinforced through sustained funding, investments to additional poor households, who fall just above in implementation capacity and a continued com- the cut-off threshold for support yet continue to mitment to evidence-based learning. These efforts face severe hardship. The table below summarizes enjoy support from a range of development part- reform priories in the short, medium and long term. ners, including from the World Bank and European Union,75 which highlights the need for effective donor coordination to further these efforts. Table 4: Recommendation matrix Short-Term Medium-Term Long-Term Cash transfers to support the poor, and vulnerable and persons with disabilities • Review delivery systems to ensure the • Implement the regular review of the NE • Reform the disability benefits poor and vulnerable are being reached. benefits to ensure consistent adequacy. (monetary disability benefits, personal • Introduce periodic updates of the Unified • Review the “other benefits” to which NE assistance, assistive technology, Scoring Formula based on evidence. beneficiaries are entitled. sanitary package) to respond to the individualized needs of persons with • Adopt a regular review of the adequacy • Increase the powers of the Social Inspec- disabilities. of the Ndihma Ekonomike (NE) benefit tion Department to address DA-related and a mechanism to inform a periodic error, fraud and corruption. • Consider expanding the coverage of increase. NE to additional poor people. • Establish a permanent DA training unit/ • Implement the NE Exit Strategy by team in State Social Services (SSS) • Assess the social pension for current providing employment and social composed of internal and external performance and projected future support to eligible NE beneficiaries. training experts. rates of coverage, costs, among other. • Provide continuous training to physicians • Scale up the new disability system to the • Introduce reforms to the “other in the Tirana, Durres and Elbasan region whole country. benefits” based on the findings of on the new disability assessment reform. the analysis (proposed under medi- • Reform the disability assessment for um-term). • Develop a training strategy, comple- persons with “status” to ensure the mented by an action plan, for the Disa- equity of the system. bility Assessment (DA) reform. • Estimate the cost of disability to reform • Increase the capacity of the Appeals the disability benefits. Committee. • Adopt case management to support • Improve the DA forms and guidelines. the provision of integrated cash benefits • Develop a monitoring system for the DA with social services and employment reform. support (see Social Services below). Back to table of contents 27 75 The EU delegation recently launched the program on EU support to Social Inclusion in Albania under IPA 2019 (2020-2025); the main focus is on strengthening social inclu- sion by increasing coverage, inclusiveness and effectiveness of social care services and the provision of inclusive education and employment opportunities. ALBANIA Social Protection Situational Analysis Short-Term Medium-Term Long-Term Social services • Ensure the full use of the management • Learn and apply lessons from the prepa- • Develop case management services information system (MIS) for social ration of Social Plans by local govern- at regional and local level for poor services and a monitoring and evaluation ments. and vulnerable people (including for (M&E) system based on it. • Put in place secondary legislation to persons with disabilities), supported • Establish standards for the remaining support the procurement of social by a skills development plan for social social services such as community-based services from non-public providers. workers on case management. services and services for persons with • Strengthen the capacity at the central • Evaluate and refine the mechanism disabilities. level to support local government units for financing social services. • Expand financing for the Social Fund. to assess their needs and prepare Social • Support and monitor the imple- Plans. mentation of social services at the • Strengthen the capacity at the central regional and local levels. level to monitor and inspect social services (staff and instruments). Pensions • Assess the long-term implications of • Explore complementary sources of • Reform specific aspects of the the current parameters on the system’s retirement income for low- to middle-in- pension system, such as special adequacy, sustainability and coverage, come individuals. regimes and coverage of rural for the old-age pension and special pensions based on evidence and regimes. analysis. • Monitor the evolution of and measure the impact of key parameters such as pension expenditures, contributors and contributory income, replacement rates, and average retirement ages to keep track. Employment and active labor market programs (ALMPs) • Operationalize the MIS and ensure • Systemize the collection of employers’ • Reform and carry out a detailed effective implementation of impact skill needs and allow for a dynamic analysis of unemployment benefits evaluations in advance of the required redesign of ALMPs to the labor market’s to inform the revision of parameters, execution. demand for skills. including: (i) duration of benefits; (ii) • Expand capacity building/training of the • Finalize implementation of the labor period of contributions, with flexibility National Agency for Employment and market review, identifying labor-skills to accommodate; and (iii) contribu- Skills (NAES) counsellors for employer trends and needs for a NAES interven- tion rate. outreach, proactive case management tion. • Pilot individual learning accounts for and specialized support for vulnerable • Consider options for upskilling special workers to accumulate training that groups. target groups such as seasonal workers fosters lifelong learning. • Assess the feasibility and procurement in tourism or agriculture. methods of outsourcing services or • Modernize the application process for programs by non-public providers. unemployment benefits. The assessment may consider issuing vouchers as a first step to diversify • Finalize the implementation of the 2017 training provision. VET Law by passing the necessary secondary legislation. • Ensure effective linkage of the NE Exit Strategy and active labor market • Institutionalize the involvement of the programs. private sector in the areas of course development, work-based learning, and accreditation and certification. Disaster preparedness and response • Assess the response of the NE and other • Introduce a crisis modifier into the NE, • Building on the NE MIS, develop a social protection programs, including which would include (i) the fast identi- social registry that could rapidly iden- social services and the role of social fication and coverage of new benefi- tify and cover additional beneficiaries workers to the COVID-19 pandemic and ciaries; and (ii) the value and duration during crises. the 2019 earthquake. of the transfer for existing and new beneficiaries. • Identify financing mechanisms, including a reserve fund and budget reallocation. • Ensure payment systems can function during crises. • Map (internal/external) actors with responsibility to contribute to disaster response and establish mechanisms for coordination, with a particular focus on strengthening social workers to support services for the poor and vulnerable in a post-crisis context. Back to table of contents 28 ALBANIA Social Protection Situational Analysis Background documents Dhembo, Elona, Bree Akesson and Lirondel Ministry of Finance and Economy (MoFE). 2019. Cheyne-Hazineh. 2020. “Social Work “National Employment and Skills Strategy Education in Albania: A Developing Landscape 2014-2020, Annual Progress Report 2018.” of Challenges and Opportunities.” European Tirana. Journal of Social Work 23 (5): 862-75. https:// doi.org/10.1080/13691457.2019.1681365. ———. 2021. “National Employment and Skills Strategy - Annual Progress Report 2020,” European Bank of Reconstruction and Development no. June 2021. Tirana. https://financa.gov.al/ (EBRD). 2019. “Albania Diagnostic.” London. wp-content/uploads/2021/06/NESS-Annu- https://www.ebrd.com/cs/Satellite?c=- al-Progress-Report-2020.pdf. Content&cid=1395290089737&d=&pa- gename=EBRD%2FContent%2FDownload- Ministry of Health and Social Protection (MoHSP). Document. 2021. “National Action Plan on Persons with Disabilities.” Tirana. European Commission. 2015. “Assessment Report on PES Capacity.” https://ec.europa.eu/social/ Organisaton of Economic Co-operation and Devel- BlobServlet?docId=14323&langId=en. opment (OECD). 2019. "Pensions at a Glance (Edition 2018)." Paris. European Commission. 2018. "The 2018 Ageing Report: Economic & Budgetary Projections Republic of Albania. 2021. “Economic Reform for the 28 EU Member States (2016 - 2070). Programme 2021-2023.” Tirana: Ministry of Institutional Paper 079. Brussels:European Finance and Economy. Commission Robayo-Abril, Monica, and Natalia Millán. 2019. Hazizaj, Altin. 2017. “Roma Children Access to Local “Breaking the Cycle of Roma Exclusion in the Government Services in Albania,” no. April. Western Balkans.” Washington, DC. http://www.crca.al/every-roma-child-kinder- garten. Scharle, Ágota. 2018. “Comparative Study on Western Balkan’s PES Performance.” Bosnia Institute of Statistics (INSTAT). 2014. “Household and Herzegovina. https://www.esap.online/ Budget Survey.” Tirana: Republic of Albania. files/user/docs/Comparative study on Western Balkans PES performance_2018.pdf. ———. 2020. “Employed by Sectors 2000-2019.” Tirana: Republic of Albania. http://databaza. United National Development Programme instat.gov.al/. (UNDP). 2020. “Review of Albania’s Voca- tional Education and Training System Review Jorgoni, Elira (2019). ESPN Thematic Report on of Albania’s Vocational Education and Training In-work Poverty – Albania, European Social System.” Tirana Policy Network (ESPN). Brussels: European Commission. Weiss, Stefani. 2020. “Pushing on a String? An Evaluation of Regional Economic Cooperation ———. 2021. “Albania  : Employment and Social in the Western Balkans.” Vienna Institute for Policy Measures in Response to the COVID-19 International Economic Studies (wiiw). Pandemic.” Back to table of contents 29 ALBANIA Social Protection Situational Analysis World Bank. 2020a. “Systematic Country Diagnostic: 2019 Update.” https://doi. org/10.1596/34777. ———. 2020b. “Western Balkans Labor Market Trends 2020.” Vienna. World Bank. 2021. Subdued Recovery. Western Balkans Regular Economic Report No.19. Spring 2021. Washington, DC. World Bank. 2021a. “Greening the Recovery.” Western Balkans Regular Economic Report No.20. Fall 2021. Washington, DC. World Bank. 2022. “World Development Indica- tors.” Washington, DC. https://datatopics. worldbank.org/world-development-indica- tors/ World Bank and Vienna Institute for International Economic Studies (wiiw). 2019. “SEE Jobs Gateway.” Vienna. https://data.wiiw.ac.at/ seejobsgateway-q.html. Ymeri, Sabina. 2018. “A Review of Local Level Budget Spending on Social Care Services.” Tirana: United Nations Development Programme. Back to table of contents 30 © 2022 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This project is funded by the European Union