Published on : 20 December 2016

The government to allocate for senior citizens $ 76 million in 4 months

Speech of Prime Minister Edi Rama at a meeting with pensioners:


With much respect I want to tell you from the outset that we feel more comfortable, although not pleased, as we have provided a solidarity package for you, for the families benefiting a financial allowance, for the disabled, for the farmers who lost their cows due to a deadly epidemics, for the flooded families from north to south, who are to be compensated. We are very grateful to you for everything you have done, but above all for the excellent example of civilization you provide to a society that is even more confused about the points of reference when it comes to morals and ethics.

I’d like to share with you some things that concern you in a direct manner, but that concern also this society to which you have made a great contribution.

We are today between the past and the future, a little more than three years after we were entrusted with the high task to govern this country, at a moment when the country was in a very tough situation. It was such a tough situation that hadn’t we intervened from the outset, it would have been impossible for us to pay salaries and pensions at the end of November 2013. That’s how dramatic the situation was. With a mountain of debt, with the energy sector on the verge of collapse which threatened to plunge not only Albania in the dark but also our finances in a very deep abyss. If we look at the troubled situation from where we started, today we can say out and loud that we have made unusual progress, by undertaking reforms that were delayed for many years, and had these reforms been made 20 years ago, today we would have been living and talking about totally different things.

Allow me to bring your direct example in terms of the financial scheme for pensions. Had the reforms we did been made 20 years ago, not only those who retired after the reform and receive a much higher pension than the once-existing cap of 240 thousand ALL, but even many among you who retired before the reform would have received today much higher pensions.

The non-reformed pension scheme we inherited produced every year a deficit of 450 million dollars. Which means that this money was covered by the state instead of being invested in hospitals, in the schools of your grandchildren, in kindergartens, in nurseries, in roads, and so on.

A scheme shaped in 1993 with the logic of 1947, when the pension scheme was created for the first time, and which was actually similar to a pyramid scheme where the state would sink year after year in a deep deficit in order to keep the scheme standing. Imagine that there were 1407 public institutions, state institutions that didn’t pay insurance contributions for all those employees who had to be insured in order to have a pension. The insurance part was kept from the salaries, instead of being paid by the state. Therefore, nobody had their contributions guaranteed in the social insurance although they were withheld from the salaries. Imagine what a stateless state we were until a little bit more than three years ago, even in the most elementary aspects that affect in a direct manner the life of citizens with long-term consequences.

Due to this craziness, the mountain of debts became grater year after year. In a normal state, 4 to 6 contributors maintain a pensioner. The amount of contributions of all those who work in the meantime and prepare to retire, is 4-6 times bigger than the number of pensioner of that time. In Albania, the ratio of contributors was a contributor versus a pensioner. Impossible! Because a person's contribution as social insurance cannot maintain a pension. This is clear.

A pension scheme was inherited based on which, as you all know, all pensions were minimal. There are many people here who have worked for decades, have paid contributions, and still are stuck with 240 thousand ALL. They cannot receive more. Imagine that until before we did the reform, the average pension was only 8% higher than the minimal pension. As a consequence, why would be people interested to enter a scheme given that whether they paid or not contributions, they received a minimal pension, and the average pension was just 8% higher? Whereas the contributions people paid over the years wouldn’t become pensions for them, but were lost in the big hole of debt.

This was related to undeclared work. People performed massively undeclared work; companies didn’t declare them because contribution wasn’t an incentive at the end of the day.

Our reform brought as result some things. First, those who retire don’t have a cap for their pensions, which means that no matter how much you contributed and how hard you worked, you’re not going to have more than 240 thousand ALL. Today, those who retire receive a pension that might go up to 400 thousand ALL depending on the contributions.

On the other hand, the number of people who contribute has increased significantly due to a combination between the fight against informality with the interest to contribute, in order to have guaranteed a higher pension in the future. Actually, in the first 9 months social insurances increased with approximately 100 million dollars, and further formalization allowed us to have 20% more contributions in 2016, and these contributions are not taxes but are direct contributions of the work of everyone in order to receive in the future a more dignified pension thanks to their work.

Although the reform is being implemented only since 1 January 2015, today we cover a broader span of population with direct benefits in relation to the contributions paid. The pension indexation method has improved because it is now a legal obligation. We made a pension indexation a few months ago, not because we decided to, because we have made it a legal obligation. No government can avoid the pension index when it is required. On the other hand, we have allocated a social pension. Had we kept the old scheme, we would have had today 5500 pensions with no penny only in the first year. Zero! Because they haven’t contributed, they haven’t worked in the state or private sector, but they were, let’s say, housewives. Grandmothers with zero pension. There will be no more of them because we have allocated a social pension, and whoever reaches the retirement age will be granted a social pension by the state, although they haven’t contributed any penny.

If we kept the old scheme, we would have today a category of elderly beggars. We should not forget that not all of them have children. There are lonely pensioners, people who have reached the pension age and have nobody. Where would have they found the money to make a living? They were supposed to beg in the streets. That’s how the old politics punished them.  

Transfers from the budget of social insurances to the household budgets have also increased – we’re not talking about the end-of-the-year compensation – they’ve increased by 17.7%. Therefore, the volume in money with which the state contributes for pensions has increased by 17.7% thanks to the reform and the new scheme of social insurances.

This means that we’re going step by step – this will take time of course – towards a pension scheme that will be self-sufficient and will affect the overall improvement of the situation of public finances, while allowing on the one hand pensioners to determine their pension – I mean those who are currently working, hence those who will retire after the reform – and also by allowing the state to have more money to invest in nurseries, kindergartens, hospitals, roads and so on.

In 2015, simultaneously with the reform, we increased pensions for 6600 war veterans. It was an old story, an old promise that we fulfilled by increasing pension by 15.6%. It would have been better, if that had happened many years ago, so that many pensioners wouldn’t leave this world with a ridiculous pension, although we know very well that no matter how much it is increased, a pension is not enough to make somebody feel happy, but at least pensioners don’t feel today treated by this government with disdain and lack of respect. Unfortunately, we cannot say the same for the others.   

We are aware that what we have done is not enough, and although some people may try to present situations based on their own interests or for their own devious political objectives, I will repeat again that we are not happy, I am the less happy with what we have achieved so far. And not because what we have done is not a lot, but because what we need to do is much more than what we have done, and it gives us the chance to understand that all these things are feasible, and the 20-soemthing-year delay is unjustifiable. It is fact, not an opinion, that those who retire after the reform receive a pension that exceeds the cap previously imposed on all the others. This is fact!

How different things would be today, if the reforms that we did were done 20 years ago! Some people even say that we’re rushing. How are we rushing?    

Had the government told people some 20 years ago that they couldn’t build on the river, we wouldn’t have flooded people every year. Had what we did in these 2 years been done 20 years ago, and had the government told people not to steal energy, we would have built all the schools, kindergartens, nurseries, hospitals, clinics that Albania needs, with the money lost by the government and the people who paid energy and taxes, and we wouldn’t be discussing today the fact that there are no clinics, no schools, that roofs are falling down, that people cannot take their kids to the kindergarten, and so on. If the government told 20 years ago that not everybody could attend university, that this country needs crafts, electricians, plumbers, machinists, and so on, like any other country, we wouldn’t have today vacancies in the highway Tirana-Durres. But you know what?    

All the enterprises that you see along the way from Zogu i Zi to Durres, on both sides, have from 50 to 60 vacancies, but they’re for craftsmen, not lawyers. Our country has the largest number of lawyers for square metres, with the most degenerate courts of the globe. Had we at least had the best courts in the world and sent out there our lawyers. But we cannot find easily either courts or proper lawyers.

I won’t continue any further saying what we would have been today, had we done the reforms we are doing 20 years ago. I’ll stop here saying that the reforms we are doing today are not reforms for the coming elections; they’re reforms for the next generation that deserve to live in a serious country, with a serious state, unlike those who missed endless chances, your grandchildren who were born when the Berlin Wall fell, and who still wander in the streets today although they have a totally useless degree as lawyers. This won’t happen to those who are born today, and neither to those who retire and have today their legitimate right guaranteed by our reform to have their pension determined based on their contributions, and not based on what the government says “it doesn’t matter that you worked 30 years as miner, or 30 years as teacher, your pension is 240 thousand ALL”. This is over!   

Now, speaking about the solidarity package, pensions will increase next year starting from 1 March, but let me tell you heart-to-heart that no matter how hard we try, it is not enough, and our possibilities are limited today, they’re not unlimited.

I understand very well that there are many people who voted this government, and they live in the countryside and say “ok, I voted you but I’m seeing nothing”. If we see this from the countryside point of view, there are many people who are rightfully annoyed, but if we see a bit farther, then we understand that this country has taken a turn, not towards an unknown destination as it was in the past with hidden debts, like those household where the head of the household loses all the money in gambling every night, and in the end he loses also the house. And the next morning, the people in that house find themselves out in the street looking for the head of the household who left. This is how Albania was in 2013. All the assets of this country were put in a gambling, in an electoral gambling.   

It is for this reason, and because pensions will increase significantly next year, although not enough, I insisted to give you this year, before the New Year, a very clear message that it is not about the money. Of course, the money is very important, but it is about the necessity to have all of you, pensioners of this country, 643 thousand men and women, feel as the focus of our attention, and not just receive a compensation, but also our humble respect. Humble, because we cannot do more than what we are doing today, while we have been forced to stop an unstoppable bleeding in the state finances, not to mention all the other things.

Now the bleeding has been stopped, and we have started to heal the wounds. Our economy is no longer increasing by 0 to 1% while increasing debts, but it is increasing steadily, although not sufficiently, while decreasing debt. We’re not taking the money of your grandchildren in order to compensate you. On the contrary, we’re decreasing debt, while compensating you, and increasing salaries and pensions. 

This is the first time that a government has allocated 100 million dollars. During the 8 years of the previous government, 124 million dollars were transferred from the state coffers to the household coffers for salaries and pensions. That’s all! Whereas we transferred 100 million dollars in 1 year, and if we count also the salaries we have increased every year for police officers, it amounts to 140 million dollars. Therefore, their 124 million dollars in 8 years against our 140 million dollars in just 4 years. If we count also the money people benefited from the tax cut in the public sector, approximately 100 million dollars, and approximately 300 million dollars in the private sector, it totals 540 million dollars that is no longer in the state coffers but in the household coffers.

And although the bin of the propaganda of mud, slander, accusations, of lies and half-truths tries to poison people on a daily basis, the simple truth is that today consumption in Albania has grown and continues to grow. This is the simple truth.

Today, employment in Albania has grown and continues to grow. Today, poverty in Albania is decreasing, not increasing. And all these are relative things, none of them is sufficient. If I say that employment has grown and continues to grow, it does not mean that we have solved the unemployment problem. If I say that consumption has grown and continues to grow, it does not mean that we’re having a party here. It means that Albania has started to recover, but it takes a very long way from “it has started to recover” to “it has recovered”, and this way is much longer than the one we have crossed with so many difficulties and challenges.

But why shouldn’t we be proud, looking at the past, for giving today pensioners 60 thousand ALL on occasion of the New Year? We feel humble, if we look at the past, and we will continue to work humbly and do everything we can. We cannot do as much as we can, but we will do everything we can for all the Albanians. There are people who keep talking, for that’s all they can do, but these other have done things, and this is what they could do for the Albanians.

66.539 out of 643.000 pensioners have received compensation for energy because they have a special status, and despite of this fact they have continued to pay the arrears. We ended this story with 20 thousand [old] ALL. There are no more arrears. I’m talking about arrears, not about bills that continue to be paid. There is another group of families, citizens who are not pensioners, with no special status, but who have an agreement with OSHEE, and they have paid arrears every month. We’ll do the same for them, we will reduce arrears by 80%.  

Just like there are many elderly people who have not been insured for different reasons. There are 600 thousand Albanians, included some elderly, who are not insured and who, starting from January, will receive for free the drugs that will be reimbursed by the state. This is what we can do today. This is not everything we want, but these are measures which we can take today, and we will do today everything we can.

Allow me with deep gratitude and much respect for everything you have done and do, and above all for the civic example that all of you pensioners give, for the precious values which Facebook is destroying, and which you convey to your grandchildren, the ethics, civilisation and much more, allow me to wish you, your families, your dear ones, happy holidays. Let the dogs bark, the caravan will move forward.

Thank you!

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