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Economy

Bank of Albania: Closing the economy hits more employment in services and construction

  • 2/18/2021 7:32 PM
Bank of Albania: Closing the economy hits more employment in services and construction

Closing the economy may affect employment in the construction and services industries more, while employment in agriculture and manufacturing may suffer relatively less.

A study by the Research Department specialist at the Bank of Albania, Bledar Hoda, has shown that the magnitude of the impact of the closure of the economy on the level of unemployment seems low, but statistically significant. The study in question tends to assess the direct immediate effect of closure on economic activity and labor markets.

Although these immediate effects may not capture the total impact over a long period of time, the estimates provide a comparison in weighing the cost of closing the economy versus the benefits in terms of curbing the spread of the virus. The study has shown that it is the service and construction sectors that may suffer the most as a result of the closure in the performance of employment indicators.

The study also showed that youth unemployment could rise faster than unemployment among the elderly population. INSTAT data showed that for the second quarter of 2020, the period with the strongest restrictive measures of economic activity due to the pandemic, the unemployment rate in the Albanian economy increased by 0.5 %.  However, it is estimated that this indicator did not fully reflect the number of jobs lost due to the pandemic.

A large proportion of those who lost their jobs did not turn out to be active jobseekers, leaving the workforce and not being classified as unemployed. But, even according to official data, for the 15-29 age group, the increase in the unemployment rate was 1.4% , almost three times higher compared to the average of the Albanian economy for the same period.

Quarterly Gross Domestic Product data showed that the impact of the pandemic and the closure of the economy was severe, with annual output shrinking by 10.23% during the second quarter of the year. With the reinstatement of some partial restrictive measures in the last quarter of the year, the Bank of Albania immediately warned that these measures may have had an immediate impact on a slowdown in the economy, as the decline was reduced to 3.47% in the second quarter.