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Salaries increase, but prices become more expensive/ Real salary is worth 150 euros less than in 2020

2026-05-19 07:18:19, Ekonomi CNA

Salaries increase, but prices become more expensive/ Real salary is worth 150

Wage growth is being undermined by high inflation, INSTAT data shows. Although the average nominal wage exceeded 86,000 lek in the last quarter of 2025, its real value has lagged far behind, as the real wage for the same period was only 72,225 lek, 14,759 lek lower or 17% less than the nominal.

The real average gross monthly salary has been indexed to inflation (2020=100) by INSTAT. This means that with about 86 thousand lek, an Albanian buys today the same goods that in 2020 they bought with about 72 thousand lek.

Although citizens' salaries have increased in monetary value, their purchasing power is falling rapidly. In the last quarter of 2025, the gap between real and nominal wages was -17% and has widened over the past year. At the beginning of 2023, this difference was lower, at only 12%. Since the basis of comparison is 2020, each quarter reflects accumulated inflation, further increasing the gap between real and nominal wages.

These data show that the standard of living is facing pressure, as higher wages have failed to neutralize the rise in the cost of living, leaving consumers with significantly weaker purchasing power than at the beginning of the decade.

Price increases are moving at a much faster pace than income growth.

Another factor is the lag in the labor market response. Although employers are raising nominal wages to retain staff, these increases often fail to fully compensate for the cost of living increases that have occurred in previous months.

Also, fiscal policies play a negative role through the phenomenon where nominal wage increases move individuals into a higher tax bracket, causing a good portion of the increase to go to taxes, while real purchasing power continues to shrink.

Successive shocks to supply chains and currency volatility have caused the real appreciation of the currency to decline.

The difference between real and nominal wages is also deepening because their growth did not come from productivity in the economy, but from pressures from the workforce. The increase in wages by decisions further stimulated the increase in prices, actually reducing the real value of wages./ Monitor.al