How to grow the economy, investments and my incomes?

How to grow the economy, investments and my incomes?

Who is the best way to revive the economy? More investment for social services, alternating with foreign investment in sectors oriented? More money for the rich, or better wages for employees?

Judging by the law of capitalism, businesses have turnover more, if employees have more money for consumption. If we rely on the facts of fiscal policy for 2014 then the followed logic is the same. It was reduces the tax on wages for employees and added 5 to 10 per cent over the money for consumption. Spending on consumer goods and services of agro-industrial products increased by 1% of GDP in 2014. The economy began to whirl as its mechanisms were put to work.

What about the pocket of employees?

Employees with salaries up to ALL 30.000 in 2014 have a share over 50% of all Albanian employees. If we add the number of employees with the average wage, then 2/3 of Albanian employees receive salary up to ALL 60.000 per month and from this point of view is considered that there may have effects increased savings / deposits. Their salaries are a broad base of potential consumption in the country. In absolute terms, the revenue that owns this category as a potential for consumption goes no more than 6-7% of domestic consumption or as 5-6% of the GDP.

Meanwhile, my income has not changed.

But, where it will go the economy, if will continue to be dominated by jobs that are paid in minimum levels or near the average wage? Does it happen to remain this level of pay because that rich people and businessmen not afford higher costs for salaries of employees?

There has never happened that the rich make the redistribution of income, as history shows that the system we live, the compassion is scheduled to last. Businessmen and the rich can to accommodate the increase of salary of at least 3-6% higher for each year of work. The stoppage of this growth can only occur when the level of inflation in 24 years to be as indexed wage level and comparable with the levels of the minimum monthly wage in the region[1]. Other elements of business costs in these countries are lower than in Albania (raw materials and taxes). Excluded here only business profit (the informal one). The profit in Albania is greater than in these countries for many goods and services, without taking into account the interference of their quality. In dialogue with the parties, the policy should be expressed about the strategy for increasing the minimum wage. Vision about the minimum wage clarifies and deploys all parties: employee, businessmen, government. Growth of low wages will further increase the pocket of customers, but also the base of taxpayers by increasing their power as consumers and active community.

But, given the fact that the increase of individual incomes comes primarily as product of investment, as well the policy analysis should focus on economic model. Then, must wait government and the economy to attract investment when investors will decide how and where to invest? Might need a designation of areas for investment by the government even though the freedom to do business is not lacking?

This means that public investments be directed towards preparing the conditions for investment according to investor requirements. The answers given can not be classified into good and bad. Investors will perform those investments they decide if they feel that their profits will be upward trends and will not be affected by instability and fiscal policy. Investors will ‘flock’ in Albania if the financial analyses show they that there is a working class cost feasible in relation to skills. On the other side will want to have a more dynamic transport links joints in place and out.

However, another point that affects their decisions is country’s health budget. Having seen that international financial institutions are already expressing positivity for the economy and public finances, then the government should prepare ‘the home’.

So, we need to fix Albania about:

– Indication of transparency and corruption;

– Economic freedom index

– Indication of the competitiveness of the economy

Let be prepared…
[1] Albania 200 $, Bosnia 205 $, Bulgaria 220 $, Croatia 488 $, Kosovo 213 $, Macedonia 249 $, Montenegro 242 $, Romania 255 $, Serbia 228 $

About the Author
Eduart Gjokutaj, has graduated to economic science at the University of Tirana. He is the founder and contributor to the Center of Economic and Fiscal Studies ‘AL-TAX’. Eduart has written numerous publications, books, analyses and essays and writes regularly in the albanian economic press.

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