Over 1400 institutions of the Albanian state have not paid social security contributions

Over 1400 institutions of the Albanian state have not paid social security contributions

IBNA Special Report/Many public budgetary institutions have not complied with the legal obligation of paying social contributions from 2005 to 2013. Minister of Social Welfare, Erjon Veliaj offers the figures. Analysts have their reserves and they demand a more thorough investigation of this case. Former minister of Finance, Arben Malaja offers several recommendations. Expert Zef Preci: In both public sector and the private sector, unions must be encouraged. Meanwhile, the Albanian governments must give up the on buying them, manipulating them and politically using them

By Edison Kurani

Around 53 subjects, out of which 1407 are budgetary public institutions, have not paid social contributions for their employees from 2005 to 2013, when the country was governed by today’s opposition.

This figure is made official by the minister of Social Welfare and Youth, Erjon Veliaj, who refers to the data of the National Service of Employment.

Minister Veliaj says that in total, the number of subjects that have not paid social contributions for their employees amounts to 53.060. Out of them, 1407 are public budgetary institutions, while 51.653 are private subjects. Practically, with the figures that Mr. Veliaj offers, more than half of the private companies officially registered in Albania, offer informal work.

Some of the most important institutions that have not paid are the Ministry of Defence, Ministry of Education, Ministry of Health, ALUIZNI (Agency of the Legalization of Informal Buildings), QSUT (Tirana University Hospital Center), etc, which during the 8 years of the previous government, have not paid the contributions of their employees, thus risking a good part of their pension.

Minister Veliaj says that the debt that 53 060 subjects owe to the Institute of Social Securities amounts to 109,5 million USD. Veliaj says that these debtors have put in danger the pension schemes of 250 thousand Albanians.

“Had this not been discovered, a good part of military officers would remain without pension. There are military units which have up to 1 million USD worth of outstanding social contributions. The country where we have lived for 8 years, has been a country where thousands of officials of the Republic of Albania have worked in black”, says Mr. Veliaj.

A delayed discovery

The left wing government came into power around a year and a half ago. It’s not clear why the current government discovered this scandal, as it calls it, only recently. Minister Veliaj admits that this problem has recently been identified, when he says that “the biggest scandal that we have discovered in the recent months relates to the government that was in office in the past eight years and on the fact that people worked for the state and the state didn’t pay their social contributions”.

Based on the data, the state has regularly deducted the mandatory percentage of social contribution from the employ salaries, but that money was never paid for the scope that the law provides.

Minister Veliaj publicly promised that all state institutions will immediately start to pay arrears.

For experts, figures are unclear

Prominent expert, Dr. Arben Malaj, is skeptic about the declaration issued by minister Veliaj. Former minister of Economy and Finance in the left wing government, says that the figures that have been published, are unclear, while he demands for whoever has knowledge about this “to help in order to clarify the figures, scale and real consequences”.

Dr. Malaj says that the reduction of risks and insecurities for every individual, is part of the management of the economy.

Expert Zef Preci says that for public institutions, this problem seems very complicated, because the treasury conditions in every case the performance of payments with their registration at the Institute of Social Securities as social and health securities. “What’s worse is that the annual budget and its compliance with the law has been regularly reported every year at the parliament of Albania”, says Mr. Preci, Executive Director of Albanian Center for Economic Research.

According to Preci, “if the figures provided by Mr. Veliaj are true, the Albanian society is facing a big scandal that involves parliament too”.

He says that the High State Audit, which has reported every year in parliament, is responsible for not having identified such scandal. Therefore, Preci suggests an examination of the reports issues by HAS.

Why was the scandal revealed during a party activity?

This “scandal” was first made public by minister Erjon Veliaj during an electoral meeting with young socialists in Durres.

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Mr. Malaj criticizes this fact: “Such scandals must not be unveiled during youth or party activities, but they must be reported to state institutions through a written letter to parliament and prosecution. This is the least that can be done, because thousands of employees have been damaged and because the state budget has been manipulated and the real level of deficit and debt has been hidden”.

A professor at the Faculty of Economy at the University of Tirana, Prof. Malaj the amounts for health contributions have been allocated in the budget and there are no problems of funding. Therefore, he’s surprised that this has happened.

“The amount which was to be spent for contributions allocated by the budget has been entered as an income in the budget of social and health securities. This prevents every risk of theft of contributions”, says he.

Albanians work without employment contracts

According to expert Preci, one of the causes of the scandal is the fact that “the majority of employees in the private sector do not have collective employment contracts or even individual ones”.

For this, he blames unions, individuals and the department of Work Relations at the Ministry of Labor.

What must be done

Dr. Malaj says that every battle with declarations in favor and against, only helps the crisis of bad governing. He says that it’s necessary to follow five steps: “The figures that have been declared must be immediately reconciled, the public must be informed in order to avoid any unnecessary overburden for the employees, a new law which gives payments and contributions a priority over every other payment must be put in place, a public reporting for the payment of contributions must be made every month and lastly, the electronic data base of contributions for every employee must be digitalized as soon as possible.

Several recommendations

Analyst Preci demands from the government to be more careful. “Every hastened action by using the “word” prison by the government may have a negative reaction by employers who may not even pay arrears and this may lead to a significant fall of the level of employment in the country”.

The expert says that the government must facilitate the work of the businesses by scheduling the payments in order to avoid the shutting down of the economic activity and the eventual bankruptcy of private firms.

Another recommendation given by Preci is the strengthening of unions, which so far have had a puppet role. “In both the public sector and the private sector, unions must be encouraged and supported. Meanwhile, the Albanian government must seriously collaborate with them and give up on buying them, manipulating them and politically using them. Unions can turn into important instruments of education, dialogue with the government and employer, protection of the employee interests and their information on their constitutional rights and rights set forth in the Work Code”. /ibna/