Albania's exhumation and aging

It says: Adri Nurellari

The Centi of 2023 showed us that Albania is experiencing a deep demographic transformation, emptying and aging in our eyes, which, although it often goes unnoticed by the noise of dailyness, carries profound and serious consequences to the country's future. With this trend and the economic system established by this government, it is clear that it is digging the very grave of the state budget, but also of its business allies. Massive migration and population aging are creating a clock bomb that will explode under the feet of government officials and large business partners who rely mainly on the trading of goods they import. With the current economic model that this government has built, it is clearly sawing down on its own branch because it is significantly cutting social security contributions and consumer taxes. When the skilled labor population departs and the purchasing power declines, the money is reduced for both the state budget and the pockets of these large importers, who have partnerships with government officials.

In the last census, conducted during 2023, the total number of inhabitants has decreased to about 2.4 million. While the average age of the population is 42.5 years (from 35.3 years in Censin 2011) and approaching the European Union's 44-year average. This growth of population age, which has been largely influenced by mass migration and to some extent by increasing longevity and declining fertility, is radically changing the way we live, work and build our future. Thus, an increase in the number of elderly and the migration of young people makes our demographics like a sandy clock coming to an end.

Based on UROSTAT data, it turns out that during the 2010-2022 period, 652 993 citizens of Albania who have been equipped with residence permits for the first time, have legally emigrated to a European Union country. Understandably, this figure does not show the total migration, because it does not include Albanians who stay illegally, as well as those who have emigrated to Western states that are not in the EU as the US, Great Britain, Canada, and so on. Moreover, the tendency to abandon the country seems to get worse because last year alone, 74938 people have received the European residence, representing 3.12% of our total population.

Continued mass departure means that Albania loses not only the workforce, but also generations of young people who could contribute to the country's development. Emigration is taking the best of us young people, like a storm that pulls out the tallest trees, which is increasingly damaging to businesses that are facing difficulties in finding qualified workers (even the few found are forced to pay salt bills). Less young means also fewer new or start-up businesses, less innovation and technology, less flexibility to adapt to market demands, less job readiness to requalified to be competent for economic dynamics.

This demographic metamorphosis that we are also suffering significantly reduces the competitiveness of international markets, because the lack of labor force as well as the contraction of purchasing power make our country less attractive to foreign investors. If we continue to become a nursing home, we would simultaneously exclude the country from the contemporary technological revolution, which is happening today with the age of artificial intelligence. The elderly population is more resistant to embracing modern innovation and technology, which are now no longer luxurious but necessary if we are to have a steady growth in the economy.

However, it should be noted that the most serious consequence of this phenomenon is undoubtedly the potential destruction of our pension scheme. Censi shows a dramatic decline in the active population, manifested by the sensitive reduction of age groups active in the labour market. The data shows that one in five individuals (19.7 percent) are 65 years old and older, compared to 11.3% in 2011 and 7.5% 2001. As a result, we have more pensioners today than ever before, from 570 thousand in 2013, reflecting on a rapidly aging population. On the other hand, the latest data shows that the number of wage employees is about 730 thousand (among which about 25% are employed in administration and public-owned enterprises).

This increase in pensioners comes at a time when young people are leaving the country massively, leaving behind a major gap in the workforce and in resources supporting the current pension scheme. So the first question in this situation is: What happens when there is less and less contributing to an increasing number of pension beneficiaries? In 2023, insurance contributions made up about 24% of state tax revenues, and this evacuation of active labour is gradually opening a huge hole in the government's sack.

This problem becomes even more complicated because an older population requires more health and social care from the state. The increased demand for health services is putting under pressure an already overloaded system, faced with lack of funds and most threatened by the bleeding of doctors and nurses towards Germany and Western countries. In Albanian culture, solidarity among generations within the family has traditionally been the main support for the elderly. However, young men's activities often leave the elderly behind without proper support from children, bringing increased demands for special social services for this age group, to be often lacking in us.

Moreover, population aging seriously threatens the government's budget, especially because of the reduction of indirect taxes on which the state stands. With an older population, the number of people with regular incomes decreases, resulting in aggregate purchasing power for goods and services. It is known that older ones are usually more cautious at expense and consume essential goods (basic foods, medicines), often having reduced VAT, or are exempt from indirect taxes or customs fees. In short, demographic change also brings about a change in consumer structure because older people tend to avoid buying long - term goods with high taxes required by young people, such as electronic devices, furniture, luxury goods, fashion, vehicles, and so on. Also, the domino effect of youth migration brings a significant decrease in consumption for more taxable services, such as restaurants, clubs, hotels, trips, etc. Here it should be noted that according to 2023 data, T The VSH, which is collected largely thanks to the purchase of newly mentioned goods and services, contributed about 32% of total tax revenues, making up the government's main source of income.

At the same time, it is well - known that compared with youth time, the third age consumes much less tobacco and alcohol and uses the car less, significantly reducing fuel consumption. These products are subject to excises, which also significantly contribute to budget revenues, making up about 10.1% of total. It is particularly worth noting that elderly people do not invest in buying new houses or large projects, lowering the large revenues the government collects from the construction sector and questioning the future a sector that has recently managed to occupy 12% of the Bruto Interior Production.

According to the latest data, out of 1,082,529 residences in Albania, 32.9% (from 21.7% who were on the level of 2011) resulted from uninhabited demographic vacuum, which is being created from large-scale human migration. The flux established in this sector is at risk of a burst simultaneously, even because of the blocking of the dirty money faucets that have swollen it as real demand declines from the decline in number of residents. On the one hand, the SPAK has fought against corruption money and crime in Albania, on the other hand, European police with massive blows to Albanian criminal networks (helped cryptophone deciphers ) Sky Ecc '%, "EncroChat" and "Matrix" are holding back the rush capital of crime that has greatly fuelled the construction and real estate market.

The reduction in consumption of goods from a growing age population, but decreases in number and purchasing power, is also a direct blow to Albania's largest businesses, which today seem to be sailing toward a turbulent sea. If the biggest businesses in the country, often considered privileged by politics, are analyzed, it is seen that they are mainly large importers and retail goods vendors. If the base of consumers is reduced and the purchasing power of the population decreases, these companies will face reduced profits, market reductions and increased costs to maintain activity. With an economic structure based mainly on trade and imports, this model is becoming vulnerable to radical demographic changes and is creating a destructive spiral, which harms not only the wide class of the population but also the economic oligarchy itself that has benefited from this system. More clearly, the current economic model is entering a vicious cycle, threatening the future of the national economy and the very resources of winning these big actors. As a result, the state will not only lose revenues from these businesses, but we will likely experience an avalanche that can affect the entire economy.

Unless bold reforms and well-advised policies are undertaken to address the challenges of non-recognition and migration, Albania risks sinking into a dangerous dynamic of the economic and social crisis. Loss of the active workforce, consumer contraction and increased pressure on public health and pension systems are threatening the foundations of the Albanian economy. The fragile current structure, which mainly relies on consumption and imports, as well as on the flow of dirty money thrown into construction and tourism, is unstable and cannot bear the weight of a population, which shrinks and ages so rapidly. Without measures to curb migration, restore the workforce, promote fertility and transform the economic model towards an economy that relies on production and innovation, the country will risk facing an economic collapse. Any delay will exacerbate problems and sink the country into a crisis it may be too late to exit.