In-depth

Economic growth, skills development and employment

Alt text for imageYoung people call for actions in the fight against domestic violence. Tirana students during 16 Days Against Domestic Violence Campaign.

Albania is a middle income country that over the past two and half decades has made significant stride in establishing a consolidated market economy. Prior to the 2008 global crisis it was one of the fastest growing economies in Europe, averaging an annual GDP growth rate of over 6%. Despite the slowdown that followed, today the economy continues to grow in an upward trajectory with growth estimates for 2017 standing at 3.5%.

The structure of the Albanian economy is dominated by small and medium enterprises (96%), which despite having a substantial contribution in terms of both economic growth and employment, have limited potential for job creation. With a narrow export and production base, and limited innovation capacities, the competitiveness of Albania’s economy is weak. Labour market data suggest that the economic growth experienced during the last two decades has not been translated into significant labour market improvements. In 2017, labour force participation rates remain below European averages, with women participation rates significantly lower than men’s. Youth participation rates are even lower and data indicate that since 2007 Albanian youth face increased difficulties in the labour market compared to other adults. Despite a recent decline, the youth unemployment rate stands at 27.4%, nearly double the national average.

UNDP Albania has recognized the importance of creating employment opportunities as a means to addressing both poverty reduction and inequalities and exclusion. Interventions focus on factors that affect labour demand and supply, policies conducive to job creation for young people, improvements in the general quality of employment, promotion of entrepreneurship, modernizing the Vocational Education and Training (VET) system, addressing the skills needs of those employed in the formal and informal sectors and emerging entrepreneurs, support to competitiveness and innovation, support to the higher education reform and more recently preventing violent extremism.

Youth Employment

UNDP’s intervention in this area are geared towards building national capacities for designing and implementing employment promotion programmes for vulnerable groups with specific focus on youth, women single heads of households, people with disabilities, etc, extension of employment services in rural areas and promotion of self-employment. Furthermore, attention will be paid to identifiying, preventing and addressing issues related to violent extremism as a result of youth alieniation.

 

Skills development

UNDP aims to make a systemic contribution to the modernization of Albania’s VET/VSD system by addressing several key challenges: skills mismatch and unequal access to employment and training services; insufficient governance of funding for employment and training; lack of coordination in the system; and insufficient quality and relevance of VET and VSD providers and their programmes. In addition, UNDP is supporting the Ministry of Education and Sports in the implementation of the higher education reform which aims to improve standards in both teaching and research, tying financing to performance and most importantly linking the higher education with the labour market.

Innovation

Innovation is geared towards social and economic empowerment, local development, resilient delivery systems, and citizens’ role in designing public services. A wide range of approaches, methodologies and tools are used to better understand the bottlenecks, tap into alternative and best available ideas voices and technologies, supporting rapid testing of innovative solutions through prototypes and scaling up what is proven to work and learning from experience. User-centered design has placed youth in the center of finding innovative solutions to issues such as access to employment services in rural areas, innovation in eco-tourism and raising awareness on gender based violence.

 

Support to competitiveness

UNDP has been supporting the Ministry of Economic Development, Tourism, Trade and Entrepreneurship and the Albanian Investment and Development Agency in terms of increasing its capacities with regard to both FDI policies and SME development. Studies on non-financial business services, the agritourism sector and SME competitiveness have been undertaken and future support is envisaged.

 

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