Demographic studies show that the category of people under 65 years of age is growing, making our society to get older.
The growth of people who should benefit from the social security scheme, due to this phenomenon and the Albanian society getting older brings another higher bill to be paid. But is this bill lightened by the increase of the pension age? The idea of the Albanian Prime Minister for changing the pension scheme, bringing the pension age to 70 years old, has caused irritations among the people.
Many senior citizens who are on the verge of 70 years of age declare that they are physically and mentally unable to work until that age.
A great part of the Albanians have passed their life by making heavy physical work. The greatest part of the population that will be affected by the decision for increasing the pension age has lived in both systems, in communism and democracy. Those who have entered the pension age a few years ago, say that it is impossible for them to make any kind of job.
Pension age increase, scheme’s deficit
For the last time, the Albanian government (then Socialist) increased the pension age with five years, for men and women alike.
For softening the public reactions, the government chose a gradual
scheme for the implementation of this law, by increasing the pension age
with 6 months for each year in a period of 10 years, until 2012. As
result, the government was able to increase the pension age from 60 to
65 years old for men and from 55 to 60 years old for women, without
receiving any harsh opposition from the public and interest groups. This
means that from January 1st of the next year, the pension age would be
65 for the men and 60 for the women. But yesterday, in the meeting with
the Parliament Group, the Albanian Prime Minister Sali Berisha declared
that this is not enough. He notified that the pension age will increase
with other 5 years.
“Going to pension at 65 years of age was set in a time when the average
life expectancy was 70 years old. Today, the average is around 78 years
old. We will increase the pension age with the increase of the life
expectancy”, Berisha declared.
Analysis – The pension scheme has turned into the greatest problem of
the Albanian budget, with a yearly deficit of 300 to 400 million USD per
year, almost the entire sum of the debt that the government takes each
year. The deficit has not increased because the Albanians go to pension
at an early age and because they live longer than before. The growth of
the life expectancy is a justification of the Prime Minister for
covering a financial crisis of this scheme. According to the World Bank,
from 1985 to 2010, the average life expectancy of the Albanians has
increased with five years. The government has already compensated this
increase, with the decision of 2002.
The real causes why the pension scheme is facing crisis are others.
First of all, it has to do with the revenues from the insurance
According to IMF data, Albania gathers two or three times less revenues
than our neighbors, although the monthly payment level is the same. The
revenues are twice lower than in Macedonia, a country reports an
unemployment level three times higher than the Albanian government. Two
are the two possible explanations of this paradox. Either the real
unemployment level in Albania is much higher than what the government
has reported, or the job market in Albania is widely informal.
The Ministry of Finances unofficially assesses that there are 50.000
employees who work without paying insurances, although some independent
experts state that this number is much higher. But this is only one part
of the fiscal evasion. There are other experts who say that even the
payments of the private companies are made for fictive wages, which
means fewer revenues. Although Albania has officially 900.000 employed
people, only 350.000 of them pay contributes regularly. The other part
either takes state subventions, or are farmers who also take
subventions. For this reason, the increase of the pension age, which
would bring difficult economic and social problems, comes from the
government’s incapability of diminishing the informal economy, for
increasing employment and well administering the taxes, and it is also
an effect of the populist policies, only for electoral effects.