OECD Study: Albanian Businesses “Lazy” Towards EU Standards, Kosovo Leads in Access to Credit Guarantees

OECD Study: Albanian Businesses “Lazy” to EU Standards, Kosovo Leads in Access to Credit Guarantees

Albanian businesses have a very long way to go to catch up with the EU in terms of productivity.

An OECD (Organization for Economic Co-operation and Development) study showed that the productivity of small and medium-sized enterprises (SMEs) in Albania is 29% of the EU average according to data dating back to 2023.

According to OECD comparisons, an employee in an Albanian SME produces an average of 14,924 euros per year, while in large enterprises this figure increases to 19,645 euros.

In the EU, an employee from SMEs is worth 52,000 euros per person and 87 thousand euros for large businesses. As a result, the productivity of large enterprises in Albania is lower than that of small and medium-sized ones, with an output of 22.6% of the average of large enterprises in the EU.

Large enterprises in Albania are not only ranked one-fifth of the EU average, but also have the lowest productivity in the region. Serbia holds the lead, with 31.4 thousand euros/person, followed by Bosnia and Herzegovina with 27 thousand euros and North Macedonia, with 21.6 thousand euros.

The OECD underlines that the path towards European standards remains long and difficult. Although Albania is recording real productivity growth, the current pace does not promise a rapid closing of the gap with the EU.

The OECD notes that none of the Western Balkan economies is expected to reach the current EU level of per capita income within the next four decades.

For Albania, the main challenge remains the further increase in value added in production and services, ensuring that wage growth is balanced with productivity growth, in order to maintain and strengthen competitiveness in the international market.

Meanwhile, the path of convergence with the EU will be made more difficult by demographic developments and financial challenges that are creating a critical crossroads for the Albanian economy. According to the OECD study, Albania is facing an alarming contraction of the labor force, with the working-age population having fallen by 18% since 2011.

This decline, driven mainly by the emigration of qualified profiles in technology, engineering and applied sciences, is directly hitting the ability of small and medium-sized enterprises (SMEs) to absorb new technologies and compete in the market.

While youth unemployment remains high, there is a deep mismatch between what the education system produces and the real demands of the labor market, making finding talent an almost impossible challenge for small businesses.

In addition to the labor crisis, Albania and the region continue to suffer from severe restrictions on access to finance. SMEs face much higher collateral requirements compared to large firms, due to the higher risk perceived by banks.

While Kosovo stands out as a regional leader for the most developed credit guarantee framework, in the rest of the region, including Albania, alternative instruments remain almost untapped.

This lack of liquidity and financial resources comes at a critical moment when businesses must invest massively in the green and digital transition to integrate into the European Union, processes that require both considerable capital and specialized labor. /Monitor