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The Albanian government announced that it will increase pensions by 8.6% starting from September, an increase that aims to restore pensioners to the same economic situation as before, compensating them for the increase in prices. And yet, despite the fact that this movement, known in technical language as "indexation", i.e. which compensates for inflation without increasing the real income of pensioners, is expected to have, according to the estimates of the Ministry of Finance, a cost of 3.2 billion lek this year and 12.1 billion lek in 2024. And for more, the 8.6% increase is likely not enough for the average retiree to buy the same amount of food with his pension as before.
Thus, according to INSTAT data, for the period September 2022-August 2023, the average inflation was 6.1%, this figure is lower than the increase of 8.6%. But within the general inflation, the inflation of the "Food and non-alcoholic beverages" group was 11.8%. In short, the pensioner with the new pension will be able to buy fewer goods than he bought with the old pension last year. Not only that: the "Food and non-alcoholic drinks" group, as the name suggests, also includes non-alcoholic drinks, such as soft drinks. If we assume that the poor groups of the population, such as pensioners, give up the latter to concentrate the money they have only on food, then we see that the group "Food" without soft drinks, has grown by 12.4%. It means that with the 8.6% pension increase, pensioners will be able to buy 3.
Within the food group, foods for the poor, such as bread, dairy, or oils, have experienced higher growth than foods as a whole.
Pensioners in Albania are divided into two large categories: urban pensioners and rural pensioners. According to the data of the Social Insurance Institute, the average income of the city pensioner in 2022 was 18,615 ALL per month or 612 ALL per day while the average income of the village pensioner was 10,888 ALL per month or 358 ALL per day.
Pensioners have not seen real income growth for over a decade now. But the national pension scheme has seen continuous deterioration due to strong growth in the number of pensioners against insufficient economic growth. /BIRN
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