An analysis of Albania’s economy from 2010 to 2023 shows that although the wage share of value added has increased, it remains below EU levels, while profits are exceptionally high and taxes relatively low, reflecting a growth model still heavily reliant on cheap, labour-intensive production rather than productivity gains.
Value Added Distribution Highlights Structural Gaps in Albania’s Economy
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Albania
Author: Vukašin Santo
Category:
Fiscal subject related
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Content accuracy validation date:
05.01.2026
Content accuracy validation time:
08:44h
The distribution of value added is the main indicator of who benefits most from economic growth: workers, businesses, or the state.
An analysis by Monitor of Albania’s economy between 2010 and 2023 shows that the country’s value-added structure differs significantly from that of the European Union. While the share of employee compensation has increased, profits remain unusually high and the tax share relatively low.
In 2023, Albania’s total value added reached 956 billion lek. Of this, 40.1% went to wages, 40.7% to profits, and 19.2% to taxes and depreciation. Although the wage share has risen from about 29% in 2010, it remains below the EU average of 47–55%.
By contrast, profit margins in Albania are far higher than in the EU, where profits typically account for 20–25% of value added. Meanwhile, the tax share has fallen from around 26% in 2010 to 19% in 2023, reflecting policy changes, informality, and the structure of indirect taxation.
Sectoral data show that Albania’s economy has grown and formalized over the past decade but remains heavily reliant on manual labour. Wage growth has largely been driven by labour shortages and emigration rather than productivity gains.
Economist Selami Xhepa notes that Albania’s economic model has long been based on cheap labour and argues that businesses should treat wages as an investment rather than a cost.
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