Albania’s gender gap in employment stems largely from women’s unpaid care responsibilities, despite gains in education and equality. Expanding and formalizing the care economy could boost growth, jobs, and revenues. Financing this requires tax reforms, reduced informality, Gender Responsive Budgeting, local government empowerment, and partnerships with private, community, and donor institutions to ensure sustainable investment.
Albania has made notable progress in advancing gender equality through gains in education, politics, health, and economic participation, yet persistent labor market gaps continue to constrain women’s opportunities. Despite women’s rising educational attainment, their labor force participation remains lower than that of men, largely due to the disproportionate burden of unpaid care work. Women, particularly those with young children, remain the primary providers of unpaid domestic and caregiving labor, preventing many from fully engaging in formal employment. This limits both gender equality and economic growth potential in an aging, increasingly emigrant population. Estimates show that reducing gender disparities in employment could raise per capita GDP by 12 percent, underscoring the economic importance of care as both a social and developmental priority.
Unpaid care work in Albania is immense, equivalent to over 1.3 million full-time jobs, with women performing 86 percent of this labor. This invisible sector accounts for nearly 90 percent of the total care economy, while the formal or “visible” sector—education, health, and domestic services—comprises the remainder. When valued monetarily, unpaid work represents more than half of the country’s extended GDP. Combined, formal and informal care work contributes around 61 percent to the national economy, yet remains largely unrecognized in fiscal policy and planning. Expanding and formalizing the care economy offers immense potential: universal access to care services could create thousands of jobs, particularly in early childhood and elder care, while strengthening tax revenues, social security contributions, and the pension system.
However, financing this transformation is a major challenge. Albania’s fiscal structure is constrained by a low tax-to-GDP ratio of 17.8 percent, well below the EU average. The tax system suffers from fragmentation, numerous exemptions, and widespread informality. Value-added tax (VAT) accounts for nearly half of total tax revenue, followed by corporate and personal income taxes, excise duties, and national taxes. Eliminating inefficient VAT exemptions, reducing informality, and introducing property and carbon taxes could expand Albania’s fiscal space by up to 5.5 percent of GDP. A more transparent, equitable, and progressive tax system would improve revenue mobilization and strengthen the foundation for investments in care services.
Financing strategies for the care economy must draw on multiple approaches. Reallocating expenditures toward health, education, and social services while curbing inefficiencies can unlock domestic resources. Current social protection spending is heavily dominated by pensions, leaving limited room for investment in care infrastructure. Local governments also lack dedicated budget lines for early childhood care, restricting coverage for children under three. Expanding funding formulas to include crèches and targeting resources to areas with low service coverage would help address inequities.
Gender Responsive Budgeting (GRB) offers another avenue to prioritize care investments at both national and local levels by ensuring budgets reflect gendered impacts and outcomes. Strengthening GRB alongside property tax reform could enhance fiscal autonomy for municipalities, enabling more sustainable local financing. Partnerships with the private sector and civil society can further expand care provision. Well-designed public-private partnerships can mobilize capital and expertise for childcare and eldercare facilities, provided they include safeguards for affordability, transparency, and quality. Similarly, community and NGO partnerships can fill service gaps in rural or underserved areas, enhancing inclusivity and sustainability.
As Albania moves closer to EU accession, international funding opportunities from programs such as IPA III, ESF, and EU4Employment can support investments in the care economy. Progressive parental contributions and targeted subsidies could also promote equitable access across income groups. Investing in care services is not only a matter of gender fairness but also of economic strategy. By restructuring taxation, improving governance, and diversifying financing through public, private, and community channels, Albania can build a sustainable care system that supports women’s employment, strengthens families, and contributes to inclusive national growth.
