Fabricators again warn of factory closures and job cuts/ Proposed measures

2025-07-01 07:41:00, Ekonomi CNA

Due to difficulties with the decline in contracts from foreign partners, loss of income from the depreciation of the euro, and cost increases in the tailoring sector, it is expected that after the end of the summer months, factory closures and job cuts will begin again.

The warning about the risk of investment and employment in the manufacturing sector is made by the president of the ProEksport Albania association, Edvin Prençe.

"The manufacturing, clothing and footwear sector employs over 60,000 people, mostly women and young people, in regions where the industry is the main employer. The reduction in orders has led to contract terminations, reduced working hours and in some cases the closure of production lines. They warn that in the absence of a political and institutional response, hundreds of jobs are at risk by the end of the year."

The main reasons weighing on the sector's performance, according to Mr. Prençe, continue to be: The continuous strengthening of the lek, which negatively affects export revenues; Increasing production costs, especially for labor and energy; The lack of a protected industrial exchange rate, which would provide a level of stability for exporters; Declining demand from European partners, linked to economic uncertainty and competition from lower-cost markets.

Due to these difficulties present in previous years, within 1 year, namely from November 2023 to November 2024, according to the ProEskport Albania association, 10 thousand jobs were lost in the sector due to the closure of factories.

There were job cuts in the garment sector throughout 2023, with Krujë, Fushë-Krujë, Laçi, Lezhë and Shkodër among the most affected areas.

To improve the situation, the association's leader proposes discussing several points that should be implemented by state institutions, such as:

– Establishing a protected industrial rate for export transactions;

– Support package to reduce the fiscal and insurance burden for the sector;

– Schemes dedicated to the transition from the Fason model to a full value-added cycle;

– Promotion of exports outside the EU and diversification of trading partners.

"In the absence of these measures, the year 2025 risks being among the most challenging for the manufacturing industry in Albania, with long-term consequences for the trade balance, the supply chain and sustainable economic development," Prençe emphasizes.

Despite the slight increase in May in exports for the textiles and footwear group, the trend for the 5-month period is negative.

Exports for the textile and textile articles group for January-May 2025, according to INSTAT data, reached a value of 25.7 billion lek. Compared to the same period in 2024, experts estimate a decrease of 2.5%.

While exports of the footwear group for January-May 2025 reached the value of 19.6 billion lek. Compared to January-May 2024, exports fell by about 0.5%./ Monitor Magazine