The decline of agriculture and industry endangers 54 percent of those employed in the private sector

2024-04-16 11:03:41Biznes SHKRUAR NGA REDAKSIA VOX

Industry and agriculture are the two sectors that have recorded the most negative performance during the year that has just passed. INSTAT reports in the Gross Domestic Product data that the industry as a whole fell by 0.69% in 2023, compared to 2022, while only the processing industry shrank by 6.12%, the strongest since 2012.

The industrial sector, which was booming until mid-2022, reversed a decade of gains from the devaluation of the euro and a drop in foreign demand after the war in Ukraine.

In negative territory, for the first time since 1997, was agriculture, which shrank by 0.68%. In the last 10 years, agriculture has grown by an average of 1%, while the result has weakened in the last three years to turn negative in 2023.

Both of these sectors are important in the economy, with agriculture contributing to nearly 20% of the Gross Domestic Product (GDP) and industry to 10%.

Even more important is their weight in employment. According to INSTAT data, about 420 thousand people provide income in the agricultural sector. INSTAT automatically considers as self-employed those who live in rural areas.

While the processing industry employs about 105 thousand people. The data belong to the year 2022.

While in total, almost 970 thousand people are employed in the private sector (not including the state administration), about 524 thousand, or 54% of them provide income from work in agriculture (43%) and in the processing industry (11%). The decline of these two sectors is a negative signal for their employment prospects.

Agriculture has entered a downward cycle, influenced by the reduction of the rural population from internal and external emigration, on the one hand, and the lack of state subsidies, on the other, which have worsened the climate in the sector, especially in livestock. In 2022, the number of heads in livestock showed an annual decrease of about 13%, while during the decade the heads were halved. Although we are the most agricultural country in Europe, many food products are imported.

In the processing industry, the main weight in employment is held by the textile and footwear industry, which at the end of 2022 had almost 50 thousand employees, or about half of the total in this sector. The textile and footwear industry works with custom material and for many years has had as its main competitive advantage the cheap labor cost. The increase of the minimum wage in recent years, which reached 40,000 lek, and the strong contraction of the euro, which is exchanged for 104 lek, from about 120 lek two years ago, has caused both shoe and clothing processors to see a decrease in strong export. In 2023, this sector realized sales of 126 billion ALL, with a decrease of 6.6% on an annual basis. The downward trend continued in December, with -15.4%.

This situation has forced many of them to lay off employees, while small factories are going bankrupt. The Exporters Association announces company closures and layoffs daily, as many partners shift orders to countries with cheaper production costs, such as Tunisia, Morocco and Egypt.

Construction and real estate, which have led economic growth in recent years, have a low weight in employment, with 56 thousand and 3.4 thousand employed, respectively.

Accommodation and food service, which are seeing growth due to tourism, had a total of about 54 thousand employees at the end of 2022, although informality is high in this sector.

In addition to industry and agriculture, the two other large employers in the country are trade with 136 thousand employees (14% of the total) and services (12% of the total), but even here the majority are self-employed, with their activity which is significantly dependent on the progress of consumption. High immigration in recent years is causing a drop in consumption, adding to the difficulties for micro-businesses.

The decline of agriculture and industry endangers 54 percent of those employed


The decline of agriculture and industry endangers 54 percent of those employed