Albania recorded a 3.5% economic expansion in Q2, signaling what should have been a positive moment for the country’s recovery and growth trajectory. However, new labor-market data from INSTAT for June–September tell a starkly different story. Instead of rising employment, the Albanian workforce is shrinking at alarming rates, raising concerns about long-term sustainability for businesses, public finances, and demographic stability.
According to the latest survey, the number of employed individuals aged 15–64 dropped by 19,561 compared to the same period in 2024. While economic growth is usually associated with job creation, Albania is now facing a paradox: more GDP, but fewer workers.
This contradiction highlights structural weaknesses—chief among them mass emigration and a fast-declining working-age population—factors that threaten to overshadow economic progress.
Employment Declines While Unemployment Remains Flat
Despite the significant reduction in employment, the unemployment rate has remained unchanged compared to a year earlier. At first glance, this might seem like good news, but in reality, it indicates a deeper structural issue.
Unemployment is not rising because those who lose their jobs are not staying in Albania to register as unemployed. Many are simply leaving the labor market altogether, either by emigrating or becoming inactive until better opportunities arise. This highlights a critical issue: the problem is not an increase in job seekers—it is a rapid contraction of the workforce.
Youth Employment Suffers the Sharpest Fall
A breakdown by age groups reveals the most troubling development:
The 15–29 age group lost more than 11,000 jobs compared to last year.
This is the demographic that should be driving innovation, productivity, and long-term economic development. Instead, they are the leading contributors to the overall employment decline. High migration levels among young Albanians continue to drain the country’s human capital at a rate that no domestic policy has yet managed to slow.
Young professionals either do not see attractive options at home or are being directly recruited abroad. The long-term impact of this outflow is profound: less talent, fewer skilled workers, and a narrower foundation for future growth.
Experienced Workers Are Leaving Too
The decline is not limited to young people. The 30–64 age group—the backbone of the Albanian workforce—also recorded a drop of over 8,500 workers year-on-year.
This signals a worrying trend: not only are young Albanians leaving, but experienced workers with skills and stability are also exiting the labor market, often for better-paying jobs abroad. As these workers depart, industries in Albania face skill shortages that could deepen over time.
Economic Sector Crises Are Intensifying Job Losses
Beyond demography and migration, structural challenges in several sectors are exacerbating the employment decline.
1. Industrial Sector & Manufacturing Crisis
Industries reliant on labor-intensive production—especially the fason manufacturing sector—are cutting jobs at significant rates. Many companies are facing:
- Falling demand in international markets
- Competitive pressure
- Losses caused by exchange-rate fluctuations
- Financial strain leading to downsizing or even closure
When these businesses struggle, thousands of workers are affected.
2. Agriculture in Decline
Agriculture, another high-employment sector, continues to suffer from low investment, rising costs, and reduced profitability. As rural workers migrate and farms become less financially viable, agricultural employment keeps shrinking.
3. Construction and Services Slowing Recruitment
While construction and services have absorbed some workforce in previous years, INSTAT data show that recruitment has slowed, largely due to:
- Rising operational costs
- Wage pressure
- Post-seasonal reductions in hospitality and tourism
These sectors are no longer compensating for job losses elsewhere.
Demographic Collapse Makes Job Creation Hard to Measure
Albania’s demographic challenges make it increasingly difficult to evaluate how many jobs the growing economy is actually producing. With the working-age population shrinking faster than new jobs are created, economic gains do not translate into employment gains.
In Q3 2025, the labor force in the 15–64 age bracket was 1,150,656 people, which is 20,344 fewer than one year earlier—a 1.7% contraction.
This means fewer available workers, fewer taxpayers, and higher pressure on social systems. For businesses, it means increased difficulty finding qualified staff, rising wage competition, and long-term vulnerability.
Why Unemployment Doesn’t Rise: The Albanian Exception
In most developed economies, falling employment automatically leads to rising unemployment. But in Albania, this link does not exist.
Many of those who lose their jobs:
- Do not register as unemployed
- Plan to emigrate immediately
- Choose inactivity until better opportunities arise
This pattern distorts official unemployment figures, masking the true depth of labor-market instability.
Conclusion: A Growing Economy With a Shrinking Workforce
Albania’s economy may be expanding on paper, but its labor market is sending clear warning signals. Youth migration, declining workforce numbers, sector instability, and demographic collapse are combining into a structural crisis.
Without urgent policy action—from labor incentives to youth retention strategies and sector support—the gap between economic growth and real employment will continue to widen, weakening Albania’s long-term development.