The growth of the unit labor cost indicator is slowing down in the last quarters. According to the Bank of Albania, in the first quarter of this year, unit labor costs increased to 4.4%, from the 5.4% increase in the previous quarter.

Unit labor cost growth has slowed for the third quarter in a row, after posting the strongest growth in at least five years in the second quarter of 2023, at nearly 15%.

In the Bank of Albania's analysis, the slowdown in growth rates has been caused by an accelerated increase in labor productivity, which has offset a faster expansion of real wages in the private sector. Higher labor productivity has neutralized the upward pressures on labor costs that are coming from rising wages.

According to the Bank of Albania, wage growth in the private sector has accelerated again during the first quarter of 2024, reaching 12.7%, from 11.6% in the last quarter of 2023. Wage growth continues to be sector-wide.

Acceleration is also observed in the real wage (corrected for inflation), where growth in the first quarter rose to 10%, from 7.7% a quarter earlier.