Salaries are increasing, but prices are rising even more. Real wages are worth 150 euros less than in 2020

Wage increases are being eroded by high inflation, according to data from INSTAT. Although the average nominal salary surpassed the threshold of 86,000 lekë in the last quarter of 2025, its real value remained far behind, as the real salary for the same period stood at only 72,225 lekë, 14,759 lekë lower, or 17% less than the nominal wage.

The average gross monthly real wage has been indexed with inflation (2020=100) by INSTAT. This means that with around 86,000 lekë today, an Albanian can buy the same goods that could be purchased with around 72,000 lekë in 2020.

Although citizens’ salaries have increased in monetary value, their purchasing power is declining rapidly. In the last quarter of 2025, the gap between the real and nominal wage reached -17% and widened further over the past year. At the beginning of 2023, this difference was lower, at only 12%. Since the comparison base is the year 2020, every quarter reflects accumulated inflation, further widening the gap between real and nominal wages.

These figures show that living standards are under pressure, as higher salaries have failed to offset the rising cost of living, leaving consumers with significantly weaker purchasing power than at the start of the decade.

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

Another factor is the delayed response of the labor market. Although employers are raising nominal wages to retain staff, these increases often fail to fully compensate for the higher living costs accumulated in previous months.

Fiscal policies also play a negative role through the phenomenon in which nominal wage increases push individuals into higher tax brackets, causing a significant portion of the increase to go toward taxes, while real purchasing power continues to shrink.

Successive disruptions in supply chains and currency instability have also caused the real value of money to decline.

The gap between real and nominal wages is deepening further because wage growth did not come from increased productivity in the economy, but rather from labor force pressures. Wage increases driven by decisions further stimulated price growth, effectively reducing the real value of salaries.

“KORÇA BOOM”