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Albania continues to implement reforms aimed at formalizing its economy and improving the quality of life for its citizens. As part of these ongoing reforms, the government announced an increase in the minimum wage, effective January 1st, 2026.
Currently, the minimum wage in Albania stands at 40,000 ALL (approximately €412). From January 2026 it will rise to 50,000 ALL (approximately €515). This substantial increase marks a significant step toward improving household income and will have a direct impact on both employees and businesses across the country.
How this affects employees and citizens?
Albania's labor market is characterized by a strong presence of the manufacturing industry, particularly in garment and textile industries, where many workers are paid at or near the minimum wage. As a result, the upcoming increase will directly affect a considerable portion of the workforce.
Over the past few years, rising inflation has heightened the need for wage to preserve citizens' purchasing power. This increase in the minimum wage is also considered a support measure that will help workers cope with rising living costs.
From a broader perspective, previous government initiatives to raise the minimum wage often prompted the private sector to follow suit. Companies typically respond by adjusting salary scales across all levels, both to preserve fair compensation structures and to attract and retain skilled employees. Such adjustments also play a key role in maintaining motivation and overall productivity within organizations.
How this affects business entities?
In general, an increase in the minimum wage leads to higher labor costs for businesses. However, acknowledging the importance of this adjustment, the government has announced that for the first 18 months following the wage increase, there will be no increase in social and health insurance contribution rates due to this change.
This transitional period is designed to give businesses the flexibility to adapt by reviewing internal policies and implementing necessary reforms, making the transition smoother and more sustainable. After this period, contributions and payroll taxation will continue in accordance to the standard regulatory framework.
Why outsourcing payroll services is always a smart move?
Frequent government-driven changes in payroll and employment regulations can place added pressure on internal finance and HR departments, especially in companies with a large number of employees. Managing such transitions in-house can be time consuming, may have higher costs, also, could increase chances of errors.
Outsourcing your payroll operations to a specialized service provider can save valuable time and resources, and reduce the risk of miscalculations or non compliance.
At Eurofast Tirana, our dedicated team of payroll professionals is equipped to handle every aspect of payroll management, from salary calculations and employment contract drafting to tax reporting and personalized consultancy tailored to your company's needs.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
