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This chapter analyses the most important policies influencing the gender and health implications of the extension of working life in Albania post 2000. Parametric reforms of social insurance will gradually increase and equalise retirement ages for men and women to 67 years by 2056, and extend the insurance period to 40 years by 2032. During the period 1993–2016, the average real retirement age has increased from 53.2 to 63.2 years old. People have the right to receive the pension and continue working and paying contributions, but if they postpone receiving pensions after retirement age, the pension amount increases by 0.5% each month; in the case of early retirement, the pension amount reduces by 0.6% each month. New types of private sector employment—part-time, self-employment, family businesses, remote working—have opened opportunities to extend working life beyond retirement age. However, high levels of unemployment, informal work, lack of adequate skills, and insufficient public services create difficulties, especially for women, to extend working life. To fully address the complexity of extending working lives, an integrated approach should involve all relevant policy areas including education, health, employment and social protection, as well as engaging stakeholders, public authorities, businesses and civil society.
KeywordsLifecourse Pension Retirement ages Gender Health Labour market
The lifecourse perspective encompasses all dimensions of an individual’s professional and family life, influenced by the social and institutional context. Socio-economic and demographic changes have influenced continuous parametric pension reforms in Albania since the beginning of the 1990s. In June 2014, Albania was granted candidate status by the European Union and this promoted institutional reforms. Due to changes in demographic patterns of fertility, life expectancy and migration, the old age dependency ratio nearly doubled (from 8.6% in 1989 to 16.7% in 2011) and is expected to grow to 32.9% by 2030 (INSTAT, SDC, UNFPA 2015a). By 2031, a gender old age dependency ratio estimated at 31% for men and at 37% for women refers to a higher life expectancy at birth estimated at 80.1 years for women and 77.0 years for men (INSTAT 2017b). In 2016, Albania had a low share of the population above 65 years old (16.3%), compared to 19.2% in EU28 countries (Institute of Statistics, Institute of Public Health, and ICF 2018: 11).
The Demographic and Health Survey 2008–2009 in Albania showed that one in two households have at least one member who has migrated within or outside Albania (Institute of Statistics, Institute of Public Health, and ICF 2010). As is the case elsewhere, migration particularly involves young adults, who migrate for reasons of employment and educational opportunities and for family reasons; migration is still dominated by young adults, but in addition to men, women increasingly go abroad as well (INSTAT, SDC, UNFPA 2015b: 21–22). Younger generations working abroad remain a potential source of support for their older parents left at home, by sending remittances and by covering expensive medical interventions, thus acting as a guarantor for older Albanians. The Albanian family continues to be a strong source of social protection for older people. This may be one reason why people are reluctant to pay social insurance contributions and why approximately 40% of employment is informal (World Bank and wiiw 2019). Promotion of formal employment for women is especially important for increasing their social inclusion, social insurance contributions and striving for higher pensions, as their life expectancy is higher compared to men.
In the framework of European integration, Albanian legislation has pursued a process of harmonisation with Acqui Communitarie, and national strategies have been enacted to guarantee human rights, gender equality and an inclusive society. However, institutional capacities still remain weak, and active engagement of all community stakeholders, such as business organisations, trade unions and civil society, is very important in this context.
Gender and Employment in Albania
The Labour Force Survey (LFS) 2016 showed that Albania’s labour force participation rate decreased from 2011 (68.5%) to 2016 (66.2%), with a constant gender gap of about 16% fewer women than men in paid work. In 2016, the unemployment rate of 27.4% for Albanians aged 15–29 illustrates great pressure for new labour market entrants (INSTAT 2016). High unemployment rates, even for those with higher education (32% according to European Commission 2016), encourages employers to shed older employees as soon as they reach the retirement age, without considering whether older workers want to stay longer in the labour market.
In 2016, 40.2% of Albanians were self-employed in agriculture (dominated by women). The non-market services sector—where activities such as public administration and other services are included—is the second most important sector for women’s employment (20%). The Labour Force Survey 2016 also showed that 42% of women were outside of the labour force, compared to 26% of men, although women’s labour force participation increased from 50% in 2013 to 58% in 2016 (INSTAT 2017a: 52). The reasons why women aged 55+ are outside the labour market are due to early retirement for about 40% and due to family engagement for 20.1%, compared to one per cent for men on family engagement.
Reconciliation of paid work with family responsibilities is important when considering extending working life. Only 46% of employed Albanian women and 50% of men work full-time 40–48 h per week (INSTAT 2017b). In the European Quality of Life Survey (EQLS) (Eurofound 2019), Albanian women report greater difficulty in fulfilling family responsibilities when compared with men. Recent changes in the Labour Code (2015) aim to facilitate maternity leave and care for sick family members, to legislate a maximum of 48 working hours per week for employees in the private sector, and to encourage employers to improve working conditions. If employees work more than 48 h per week and work on Sundays, it is not sufficient for the employers just to pay additional money, as happened in the past; employees now have the right to take a break.
Transformation of Pension System
From a lifecourse perspective, transition from employment to retirement is regulated mainly by two basic laws: Labour Code 136/2015 and Law no. 7703 (dated 11.05.1993) on ‘Social Insurance in the Republic of Albania’. The general public system of social insurance is composed of: (1) compulsory, (2) voluntary, (3) supplementary social insurance. It is a pay-as-you-go (PAYG) model. Since 2015, the social pension was introduced as a means-tested benefit for Albanian residents above age 70. Fully funded defined contribution private pension schemes were only started after 2005.
Reformation of the pension system started in 1993, with parametric changes that unified retirement ages at 60 years for all categories of men and at 55 years for all categories of women, for a transitional period until 2024 (Law no. 7703 dated 11.05.1993, amended in 2002). Previously, there were differences in retirement ages across three categories of professionals, and a five year difference between women and men. Category I professions (miners, metallurgists, geologists etc.) had the lowest retirement ages (45 for females and 50 for males); category II, teachers, had a retirement age of 50 for females and 55 for males; and category III, civil servants, had a retirement age of 55 for females and 60 for males. The retirement age for employees in agriculture cooperatives was 65 years old for both women and men. The unification of the eligibility criteria for pensions was imposed by the new political and economic system in Albania, which allows freedom of choice of profession, place of work, and place of residence. This created opportunities and increased mobility for people from rural to urban areas, from employment in state enterprises to the private sector, from employment to self-employment, and so on.
Meanwhile, the minimum insurance period for an old age pension was increased from 15 to 20 years, with a maximum of 35 years for a full pension for both women and men. As the contributory principle was established, the period of university studies was considered as an insurance period for women when they retired and the state will pay the minimum level of contributions. The social insurance fund was separated from the state budget to clearly identify revenue from contributions and subsidies from the state budget. A new semi-public autonomous administration was established, governed with participation of representatives from the government, the trade unions and the employers’ organisations.
In the beginning of the transition to a market economy, there was tension between using pension policy as a quick fix while also assuring the long-term sustainability of new social insurance institutions (Xhumari 2011). Through the introduction of early retirement, the pension system helped older workers who were unemployed within five years of reaching state retirement age. The early retirement pension was calculated at the rate of 60% of the average monthly wage. Beneficiaries get a regular pension calculated at 70% of the minimum monthly wage for the minimum pension, once they reach official retirement age. Albanians did not hesitate to apply for early retirement. As a consequence, the number of pensioners increased and contributors declined, changing the dependency ratio from 4.5:1 in 1990 to almost 1:1 from 1993 until now. The replacement rate of old age pensions decreased from 70% to around 40% during the same period. Since 1993, the formula for calculating pensions considered all contributions paid throughout the working period. Social insurance contributions shared between employers and employees increased initially up to 45.9% of wages, but gradually decreased in 2009 to 24.5% of wages. However the state budget still needed to subsidise the social insurance fund from 1.8% of GDP in 1993 to 1.89% of GDP in 2016 (Social Insurance Institute of Albania 2017).
The second wave of pension reform (2002) increased retirement ages, adding five years for both men (60–65 years old) and women (55–60 years old) during a transitional period (2002–2024), while the minimum insurance period for old age pensions was reduced from 20 to 15 years. The termination of employment as an eligibility criterion for old age pension was abolished, so pensioners may have a pension and continue working and paying social insurance contributions. Early retirement was a right for everybody provided they have 35 years of insurance period, within three years before the official full retirement age, with benefits reduced by 0.6%/month. For late retirement, pension benefits increase by 0.5%/month for 4 years, for Albanians working after the official retirement age (Law no. 7703 dated 11.05.1993).
Some indicators of the pension system in Albania, 1990–2016
Share of pensioners/total population
Formal age of retirement
45–65 years old
50–65 years old
55–65 years old, still in the process of increasing
The average real age of retirement
Maximum insurance period for a full old age pension
35 years, still in the process of increasing
Replacement rate (average old age pension/average wage)
Dependency ratio (number of pensioners/number of contributors)
Percentage of social insurance contributions/wage
42.5% out of which 31.7% for pensions
27.9% out of which 21.6% for pensions
Subsidy from state budget to social insurance budget as % of GDP
Debate on Extended Working Life
While the approaches varied—particularly with regard to the choice between parametric and systemic reforms and over the introduction of funding—in all cases, reforms typically focused on issues of pension sustainability rather than benefit adequacy (Holzmann 2007). As the Albanian Government, with the assistance of the World Bank after 1990, was designing the reform intended to secure the financial sustainability of the social security system, pensioners’ organisations, academics and trade unions were arguing to support social sustainability and the adequacy of benefits. For example, trade unions advocated early retirement for older workers as the only way to manage their dire unemployment situation. Trade unions also opposed increased retirement ages, especially for miners and other occupations where longer employment was unreasonable. Only in 2014 did the trade unions succeed in establishing a pension scheme for the employees that have worked underground in mines. This category will be eligible for full old age pensions with a lower retirement age at 55 years old and 30 years of insurance period, where at least 12.5 years was in mining at underground (Law no.150/2014: Art.3).
Reflecting the new Law on Higher Education and Science Research (2015), professors are allowed to negotiate to keep their positions longer, instead of being ‘sent into retirement’ automatically by a unilateral decision of the employer. A supplementary PAYG scheme for them was added to other supplementary schemes for civil and military service.
The opportunity to extend working life beyond the official retirement age is mainly for employees in the private sector and self-employed people. There are cases of older teachers, nurses, doctors, engineers, lawyers and economists who have moved to work in the private sector following enforced retirement from the public sector. However, flexibility in the transition to retirement is not available to everyone, as it requires the agreement of the employer in both public and private sectors. Research should identify sectors where later life employment is in demand by Albanian employers, and how this would be possible for anyone who wants to continue to work.
The low replacement rate of pensions, reduced from 70% of the wage in 1993, to 41.7% in 2016, has been another topic in debates between the government and the pensioners’ associations, academics and trade unions. At the centre of debates was respecting the contribution principle to encourage people to pay more contributions and the ILO Convention no. 102/1952 on Minimum Standards of Social Security, ratified by the Albanian Government since 2005. However, prospects for extending working life and the employability of older workers should not be seen only as an individual choice to guarantee the living standards they are used to. There are few jobs available for older workers that are consistent with their abilities and health status.
The new PAYG pension system is based on solidarity between the younger and older generations, and the intra cohort solidarity of old age pensioners. The intra cohort solidarity is distinguished by a high level of redistribution from those with higher pensions to those with lower pensions, characterised as the ‘egalitarianism of the pension system’ (Broka 2018). The old age pension benefit is progressive, with a greater proportion of benefits earned for contributions at minimum wage (with a replacement rate of 70%), whereas the replacement rate is 35% for contributions of those with higher wages, up to 5 times more than the minimum wage (the ceiling for payment of contributions). This high level of redistribution, unsupported even in the socialist regime, has demotivated workers from paying contributions on higher levels. By law, employers and the self-employed pay contributions based on the minimum wage defined each year by the Government, but often employees in the private sector declare just the minimum wage for payment of contributions, as it has the highest return for benefits. As a result, about 90% of old age pensions are at the minimum level of benefits necessary to survive. One of the directors of the Trade Union Institute argues that even the amount of contributory minimum pensions does not meet the minimum standards of living (Telo 2016).
The paradox is that the definition of the official retirement age is taken more as a right of the employer (mainly the public sector) to get the employees out of employment into retirement, and less as a right of the employees to decide if they want to leave their job or to continue in work. Extending working lives should be broadly considered through the complexity of interventions into the labour market, enabling or requiring employers to offer flexibility for the transition to retirement. Such interventions are unavoidable if Albania aims to follow the objectives of the EU Strategy 2020 for extending the active age until 70. If this aim is to be met, it is not only through increasing the official retirement age of pension system, but through offering employment and training opportunities for older Albanians.
Gender and Health Implications
The share of older people working after retirement age, 2011–2017
% of men aged 65 +/to total men of this age group who continue working after retirement age
% of women aged 60 +/to total women of this age group who continue working after retirement age
The employment status of those who continue working after retirement age is that own-account workers dominate at more than 60% in the case of men, and contributing family workers at more than 50% for women (INSTAT, LFS 2017c). As for the higher employment of women in agriculture, they mainly comprise family workers. Changes in pension formula, increased retirement age and lengthening insurance periods have contributed to low pensions for women, who have an average of 29 years insurance period, compared to 31.1 for men (Social Insurance Institute 2017). While women receive pensions for an average of 25 years (compared to only 20 years for men), for most women the transition into retirement equates to a transition into poverty. Introduction of the social pension, as a means-tested social assistance for those above age 70, is especially directed towards women, who have higher unemployment, lower contribution periods and greater life expectancy compared to men (Law no. 7703 dated 11.05.1993, amended in 2015).
The EQLS 2016 showed that depression increases with age, and is correlated with worries about income in old age, implying the need for adjustments to social protection to meet older Albanian women’s needs (Eurofound 2019). Measuring inequalities in health provides important evidence to policymakers for developing equity-centred healthcare programmes. The promotion of safe working environments is important, given the increasing number of disabled women of working age. In 2014, a preventive healthcare policy offered free basic medical annual examinations (Check-Up) to the 40–65 age group; in 2016 that was extended to encompass the 35–70 age group. Population screening for the most prevalent disease prevention and early detection of disorders aims to improve health, to promote healthy lifestyles and to improve wellbeing in work. Most people who attend the check-up are women and most are aged 50–65 years. The initial data shows that about 18% of people who attended had hypertension and were unaware they had it (Compulsory Health Care Insurance Fund 2015).
The last Albanian Living Standard Measurement Survey (2012) confirmed that disability, chronic disease and depression are higher among older women than older men (INSTAT 2012a). The EQLS 2016 also shows a gender gap regarding health indicators in Albania. On average, 69% of men and 52% of women report ‘good’ and ‘very good’ health, which is a better rate than some Member States, but lower than the EU average of 73% for men and 66% for women (Eurofound 2019). This situation can be explained by the relatively young Albanian population, with a mean age 35.3 years (INSTAT 2012b). In the youngest groups, 92% of men and 79% women report ‘good’ or ‘very good’ health, compared to the older groups, who report ‘good’ or ‘very good’ in 36% of men and 26% of women. The EQLS (2016) also shows a gender and age pattern for risk of depression in all EU countries, which is higher for women compared to men. Among the 18–34 year old age group in Albania, 18% report being at risk of depression, compared to 45% at risk of depression for those aged above 65. Albanian women reported a higher risk of depression (35%) compared to men (26%) and this difference is more evident among older women (57%) compared to men (33%), although the longer life expectancy of women should be taken into account (Eurofound 2019). This can be taken into account as one of the factors influencing early retirement of women compared to men in Albania. There is an urgent need for an integrated approach to both prevention and improvement of health care in order to face the high burden of non-communicable diseases in transitional Albania (Institute of Public Health & UNICEF 2014: 122, 134). This data from the EQLS and other INSTAT surveys should be used as an evidence base when considering the implications of future pension policy of increasing retirement ages.
Different factors influence peoples’ lifecourse decisions. Extending working life is affected by complex factors including institutional arrangements such as fixed retirement ages, demand for jobs, adequate skills, training, services available to facilitate women’s employability, working conditions, and so on. Pension reforms that increase retirement ages and the insurance period, that discourage early retirement and create incentives to keep older workers in employment beyond retirement age, will necessarily depend on improvement in employment services, labour contracts and public services. Labour Code improvements, both in work-life regulations and support for women in their family responsibilities, need to be integrated with vocational training that is rarely offered by employers. Development of occupational pension schemes might have an impact on extending working life through flexible retirement ages.
Albanian society has experienced transformations with a rising symmetry in gender roles and in lifecourse organisation, although gender differences are evident. The gendered lifecourse patterns are distinguished by women having more family responsibilities, more difficulties in balancing work and family life, fewer employment opportunities and lower incomes compared to men. Having a longer life expectancy, women remain in later life for a longer period, enduring a lower standard of living, and are at higher risk of depression, material deprivation and health problems. The challenges to significant investments in human capital and public services frustrate Albania’s convergence towards EU integration.
Effective policies for extending working life are a challenge and require an integrated approach. Socio-economic factors, including high youth unemployment, create pressure on older workers to leave their jobs at retirement age. There is limited literature and not much public debate on extending working life, as high unemployment and scarce jobs have led policy priorities to focus on youth employment and vocational education. As the analysis demonstrates, more societal action is needed to address inequalities and differences between women and men for full inclusion in Albanian society. Preventive healthcare is a priority, as risk of depression and health problems are higher among older women. Further research is needed on the gender and health implications of the potential for extended working life in Albania.
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