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HomeBalkansPolitical Hiring in Albania Driving Public Firms Deeper into Debt

Political Hiring in Albania Driving Public Firms Deeper into Debt

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The recommendation letters were uncovered during a routine audit in 2019 at Agrocredit, a state-owned bank that offers loans to the agricultural sector. 

They weren’t, however, sent by bankers, university professors, or people in the finance sector setting out the qualifications and personal qualities of a candidate for a job at Agrocredit. They were sent by Albania’s ruling party, the Socialists.

One recommended the bank hire a member of the party’s youth arm, known by the acronym FRESH, citing his active participation in Socialist campaign rallies. 

“He is an excellent contributor,” the letter read.

Agrocredit is not an organ of the Socialist Party, but a state-owned bank founded in 2009 with a remit to support the country’s farmers.

It has not fared well. According to financial statements, some 28 per cent of its loans have gone sour, a far higher rate than the country’s financial sector as a whole, where bad loans amount to just five per cent. 

Agrocredit is losing money – 1.4 million euros in 2020 and 330,000 in 2021. Yet with just 20 million euros in assets, it employs some 130 people, a far higher ratio than for banks in general in Albania, which employ a total of 6,900 to manage assets of roughly 18 billion euros, according to data from the Albania Bank Association.

Critics say Agrocredit is a prime example of a jobs-for-votes phenomenon that, according to data obtained by BIRN, sees publicly-owned companies increase staff numbers by an average of five per cent every electoral year.

Data provided via a Freedom of Information request and from financial statements show that publicly-owned companies are posting ever greater losses, yet their staff numbers have reached new heights over the past several years.

Critics say that hiring often happens in violation of the rules, without a competitive process. And public services are suffering.

“Most of the companies are losing money due to the misuse of their finances to hire for votes,” said Pano Soko, an activist of Nisma Thurrje, an opposition party. “Some of the directors of these companies easily avoid scrutiny and operate often in violation of the rules on financial management, transparency and accountability. They typically have even poorer transparency standards than the normal state bodies.” 

Lossmaking and overstaffed

In 2022, there were 28 publicly-owned enterprises and two financial companies under the control of Albania’s central government. A further 122 came under the responsibility of local government units. These companies had some 18,433 employees, according to the Albanian Institute of Statistics, and are run by political appointees. 

Albpetrol, Albania’s state-owned oil extraction company, is 108.5 million euros in the red, yet in 2017, when Albania held a parliamentary election, its headcount jumped to 2,277 from 1,867 the year before. Likewise, six months before the next election, in 2021, the company took on 122 new employees.

Albpetrol accounts for just 10 per cent of crude oil production. To compare, the biggest private player, Chinese-owned Bankers Petroleum, provides roughly 83 per cent of production, yet it has a staff of just 550 employees and spends 8.6 million euros on wages. Albpetrol’s wage bill, on the other hand, is 14.2 million.

Ahead of local elections in mid-May this year, the three big state-owned companies in electricity production and distribution, OSHEE, OST, and KESH, added 400 new employees, an increase on their total workforce of about five per cent. Electricity distributor OSHEE accounted for most of the new hires, according to company documents obtained by BIRN, taking its headcount to roughly 6,500.

An OSHEE official, who spoke on condition of anonymity, said the increase was mainly the result of a plan to split the company’s regional directorate in Dibra region into two separate units; the plan never went ahead, but the staff had already been hired.

OSHEE told BIRN it had increased its workforce by some 50 people in order to service remote areas.

The company spent some 60 million euros on wages in 2022. This year, its wage bill is expected to grow to some 79 million due to staff increases and pay hikes to cover higher than usual inflation.

The Energy Transmission Operator, OST, increased its staff by 60, a 7.5 per cent rise. By 2022, its wage bill had grown to 12.5 million euros from just over nine million five years earlier.

Lossmaking and overstaffed

In 2022, there were 28 publicly-owned enterprises and two financial companies under the control of Albania’s central government. A further 122 came under the responsibility of local government units. These companies had some 18,433 employees, according to the Albanian Institute of Statistics, and are run by political appointees. 

Albpetrol, Albania’s state-owned oil extraction company, is 108.5 million euros in the red, yet in 2017, when Albania held a parliamentary election, its headcount jumped to 2,277 from 1,867 the year before. Likewise, six months before the next election, in 2021, the company took on 122 new employees.

Albpetrol accounts for just 10 per cent of crude oil production. To compare, the biggest private player, Chinese-owned Bankers Petroleum, provides roughly 83 per cent of production, yet it has a staff of just 550 employees and spends 8.6 million euros on wages. Albpetrol’s wage bill, on the other hand, is 14.2 million.

Ahead of local elections in mid-May this year, the three big state-owned companies in electricity production and distribution, OSHEE, OST, and KESH, added 400 new employees, an increase on their total workforce of about five per cent. Electricity distributor OSHEE accounted for most of the new hires, according to company documents obtained by BIRN, taking its headcount to roughly 6,500.

An OSHEE official, who spoke on condition of anonymity, said the increase was mainly the result of a plan to split the company’s regional directorate in Dibra region into two separate units; the plan never went ahead, but the staff had already been hired.

OSHEE told BIRN it had increased its workforce by some 50 people in order to service remote areas.

The company spent some 60 million euros on wages in 2022. This year, its wage bill is expected to grow to some 79 million due to staff increases and pay hikes to cover higher than usual inflation.

The Energy Transmission Operator, OST, increased its staff by 60, a 7.5 per cent rise. By 2022, its wage bill had grown to 12.5 million euros from just over nine million five years earlier.

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