The International Labor Organization (ILO) estimates that Albania's undeclared employment is almost twice as high as the European average and one of the highest in Europe. 

According to data belonging to 2019, the ILO estimates that informal employment in Albania is 56.7 percent of total employees. After Albania, Bosnia has the highest rate of informality in employment with 30 percent of total employment. In other non-EU European countries, this indicator is many times lower. In North Macedonia, informal employment was only 13.8 percent of the total in 2019, while in Serbia 18.7 percent. 

Even Moldova, which for some other economic indicators ranks worse than Albania, has informal employment 25 percent of the total. In the European Union, informality in the labor market averages 18 percent according to the ILO. 

The ILO calls that Albania still has a largely untapped space in the labor market which can be used to reduce the deficits of the pension and health insurance scheme. Informality in Albania remains a concern for businesses and individuals who operate within the contours of the law and exploit its weaknesses by creating tax evasion. 

Typical cases include undeclared work, where entities intentionally evade labor taxation by providing cash wages, widely known in Albania as "envelope wages". For social insurance, undeclared work means fraud and evasion of tax and social insurance contributions. It is typical to declare a salary when the employer pays the employee with a salary level which means the minimum level of contribution determined by law, while the rest of their salary is paid in cash. 

According to ILO experts, the informality that comes from undeclared wages is much more challenging than undeclared employment. For Bosniaks, 32 percent of the employed population is provided informally. Outstanding social security contributions amounted to 4.7 percent of GDP and unpaid income tax to 0.5 percent of GDP. 

In Moldova, 34.8 percent of the employed population had an informal job. Undeclared income due to informal employment and under-reporting was equal to 12.9 percent of GDP. Outstanding social insurance contributions from undeclared income were 5.2 percent of GDP (4.1 percent for social security and 1.1 percent for health insurance). 

Informality in the labor market in Albania is complex. There are categories such as farmers included in the scheme and undeclared work. Of the working-age population, 20-64 years old, the number of contributors to the insurance scheme represents only 44.5 percent. The remaining 55.5 percent of the working population was not contributing to the Social Insurance Institute. Insurance coverage is full for civil servants, and further down to 42 percent for self-employed, and virtually zero for informal workers.