The payment for parental leave in Albania remains among the lowest in the region, ranking behind Serbia, North Macedonia, and Montenegro, where parents on parental leave are paid the full net salary. Experts suggest amending the law so that parents can receive equal payment to their full salary during the leave. They clarify that low payment worsens the situation for families and creates inequality.
Klaudja Karabolli
Vjola H. shares that after giving birth to her son, she immediately returned to work because the income was not enough.
“When our family expanded, the costs increased as well. After giving birth to my son, I had to return to the company where I worked as an economist. During my parental leave, I was paid only 80% of my net salary, which was insufficient. If the parental leave payment were higher, I would definitely choose to stay with my son and take care of him,” says the 35-year-old, who explains that her colleagues in the same situation have acted similarly.
For eight years, the payment for parental leave in Albania, unlike in most countries in the region, has been calculated based on net salary rather than gross salary, automatically making this payment lower, as the net salary is the actual salary after taxes have been deducted.
When analyzed from a current social perspective, where there is a massive outflow of young people from the country and a decline in birth rates, the increase in parental leave payments, in addition to the economic effects, can also be considered a stimulus for promoting birth rates, according to experts.
Here’s how a parent on parental leave is paid less
According to the law, in order to be eligible for parental leave, the mother must have worked and been insured in our country for a continuous or interrupted period of 12 calendar months in one or more workplaces. During pregnancy, she must have worked for at least one week.
The right to childcare leave is also granted to the father or the insured adopter if the mother does not exercise this right or does not meet the conditions to benefit from it.
The Law on Social Insurance specifies that a parent on parental leave will be paid 80% of their net salary for the first six months of leave and 50% of their net salary for the second six months of leave.
Photo from Klaudja Karabolli
Before the amendment of the Law on Social Insurance in 2014, a parent was paid more for parental leave. This was because, under the previous law, parental leave was calculated based on gross salary, which is higher than net salary.
Specifically, if we consider the minimum wage (34,000 lekë) before the law change, a parent with a declared salary of 34,000 lekë would receive 80% of the gross salary, which is 27,200 lekë for the first six months, and 50% of the gross salary, which is 17,000 lekë per month for the second six months. However, after the law change, the same parent with the same salary of 34,000 lekë receives 80% of the net salary, which is approximately 24,000 lekë for the first six months after childbirth, and 15,000 lekë for the second six months. Therefore, the parent receives 3,200 lekë less per month for the first six months and 2,000 lekë less per month for the second six months.
Meanwhile, for the maximum salary of 150,000 lekë, a parent receives 94,000 lekë under the amended law in force since 2014. However, if the calculation were based on gross salary, a parent would receive 120,000 lekë.
Therefore, the change in the concept of the base on which the calculation of parental leave payment is made results in a parent with a salary of 150,000 lekë receiving 26,000 lekë less under the current law in force.
Considering the high level of informality, which is another factor contributing to the reduction in the value of parental leave payments, the Institute of Social Insurance appeals to citizens on its official website to avoid receiving undeclared wages.
“Request that social insurance contributions be paid based on your actual salary! If they offer it, do not accept cash envelopes from your employers! Not only is this a violation punishable by Albanian laws, but it also directly affects the reduction of benefits derived from social insurance contributions.”
Despite the call, there is currently a lack of long-term mechanisms to address this situation.
The maternity leave payment fund is increasing, while birth rates are declining
Despite the fact that parental leave is paid less and birth rates in Albania have declined (according to data provided by INSTAT), the fund allocated from social insurance for parental leave payments has significantly increased year by year.
Open Data Albania has conducted a report comparing the total value of parental leave payments with the total number of births in a specific year, where the average burden-birth payment shows an increasing trend over the years.
Graphic from Klaudja Karabolli
For the year 2020, the average payment per birth is 138,878 lekë, which is 10.1% higher compared to the previous year. Open Data Albania analyzes that factors contributing to the increase in the average payment include the decline in the number of births, the increase in the average wage for women, the increase in the female labor force participation rate, and the increase in female employment over the years.
Therefore, even though the parental leave fund has a rising trend each year, this does not reflect higher payments for the beneficiaries of parental leave.
This is further confirmed by data provided by the Institute of Statistics, which shows a declining trend in the number of births in Albania. Specifically, in 2021, there were 3,658 new births, which is lower than the number in 2017.
Graphic from Klaudja Karabolli
Expert Morena Boja goes further and believes that an improvement in the law regarding parental leave payment could have a positive impact on increasing the new population.
“Increasing the payments for parental leave, in addition to the economic effects, can also be considered as a stimulus for promoting birth rates in the country. We live in challenging times, so the Law on Social Insurance needs to be reviewed and improved continuously,” expresses the expert to INA MEDIA.
The Law on Social Insurance creates inequality
Other experts declare that the amendment of the Law on Social Insurance is urgent in order to reach a parental leave payment level of 100% of the gross salary. Ylber Gjeta, an employment expert, states that we should at least be at the levels of the region.
“In Albania, informality is high, so the calculation of the parental leave should at least be based on the employee’s gross salary. Intervention in the law is urgent so that a parent in our country is paid during parental leave as much as a parent in North Macedonia. Moreover, the law should also consider salaries above 150,000 lekë as a basis for parental leave, which currently is not recognized for employees,” expresses Gjeta.
Photo from Klaudja Karabolli
Activist Rezearta Çaushaj declares that parents in Albania are also taxed, at a time when the state should reimburse individuals for the period during which they have paid taxes while working.
“This law must definitely be changed because it is arbitrary, but especially because it burdens a payment that is minimal in most cases. This is because, as confirmed by the trends in wages in the capital in past years, the majority of employers declare a minimum wage to the Tax Authority, and the calculation of the parental leave benefit is based on this minimum wage, from which taxes are then deducted,” expresses the activist.
Furthermore, Çaushaj states that this law is causing more harm to women who depend financially on their spouses, deepening the gender inequality gap.
Moreover, the figures obtained from the Institute of Social Insurance confirm that, although both parents have the right to parental leave in Albania, the majority of beneficiaries are women.
Graphic from Klaudja Karabolli
On the other hand, expert Morena Boja states that the effects of changing the law on the Social Insurance Fund should be carefully considered.
“Before making changes to the law, the Social Insurance system itself needs consolidation. The parental leave payments are made by the Social Insurance Institute, and if we are to change the law, the effects of this change on the budget of the Social Insurance Institute should be examined. Additionally, the organization of the Social Insurance and Health institutions should be evaluated to determine if any changes are necessary,” expresses Boja.
The arbitrary law burdens women
According to the data obtained from the Social Insurance Institute, it appears that in 2021, 18,139 maternity leaves were taken by women, while 769 were taken by men. However, the total number of births for this year is 27,211. Therefore, based on calculations, it is evident that 8,303 families did not benefit from maternity leave in 2021.
The reasons for this negative ratio could be undeclared wages, wages above the 150,000 lek threshold, citizens living abroad, etc.
In the same line, activist Rezearta Çaushaj also states that the law regarding maternity leave payment burdens women’s conditions the most.
“The effect of this law is that the parents, mostly women, either suffer economically or is forced to return to work, denying them the opportunity to navigate the challenging postpartum period with ease,” expresses the activist.
Furthermore, Çaushaj states that amending the law to allow women to receive taxed wages is the right move, combined with improving child care services.
Considering these viewpoints, we asked the Ministry of Health and Social Welfare if there are any proposals for changes to the Social Insurance Law regarding maternity leave payment. Through communication, the institution confirms that there are no proposals for amendments.
Albania, among the last countries in the region.
Countries in the region, such as Croatia, North Macedonia, Montenegro, and Serbia, have the benefit of maternity leave set at 100% of gross salary. Serbia provides the most favorable conditions for newborn care, as the maternity leave benefit amounts to 106% of the salary, according to calculations by Open Data.
At lower levels for the region, Bosnia and Kosovo stand with an average of 60%.
The economics expert in North Macedonia, Abil Baush, explains that employees who take leave due to pregnancy, childbirth, and parenting, as well as leave for childcare and child protection, have the right to full salary compensation.
“In North Macedonia, the compensation rate during absence due to pregnancy, childbirth, and maternity leave is 100% of the base salary. The funds for maternity leave compensation are provided by the budget of the Republic of North Macedonia,” says the expert.
Family protection is one of the key promises of political parties, but if we refer to their political programs, there is no specific plan mentioned for improving the Law on Social Insurance, which directly affects the quality of life of citizens who contribute through taxes throughout their lives.
Ky shkrim është pjesë e projektit që mbështetet financiarisht nga Zyra e Mardhënieve me Publikun e Ambasadës së SH.B.A. në Tiranë. Opinionet, gjetjet, konkluzionet dhe rekomandimet e shprehura janë te autor-it/ve dhe nuk përfaqesojnë domosdoshmërisht ato të Departamentit të Shtetit. / This article is part of a project that is financially supported by the Public Relations Office of the US Embassy in Tirana. The opinions, findings, conclusions, and recommendations expressed are those of the author(s) and do not necessarily represent those of the Department of State.