Rama and Economy and Innovation Minister Delina Ibrahimaj met entrepreneurs from various sectors to discuss the government’s “Double Your Entrepreneurship” programme.

Addressing challenges facing the garment industry, the government head said its traditional business model had been built around cheap labour, which was no longer sustainable.

“Low-cost labour is no longer a competitive advantage and insisting on low-wage garment production no longer works,” Rama said, adding that businesses could secure bank support if they had a sound credit history and were prepared to change their production model.

He urged companies to move from producing garments from semi-finished materials supplied by clients to a fully integrated “Made in Albania” cycle, covering processes from design through packaging and marketing.

Rama said the transition would require investment in technology and skilled workers but was achievable because the industry already had experience, expertise and established markets.

Such a shift would take the sector to a different level and reduce its exposure to exchange-rate fluctuations, he said.

Rama acknowledged that the garment sector faced difficult conditions across Europe, including among major fashion companies, but said some Albanian businesses were already moving beyond the era of low-cost labour.

He said rising wages, living costs and changing expectations had made the old model increasingly unviable, citing the example of young workers who were no longer willing to take factory sewing jobs even for significantly higher pay.

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Speaking at a press conference, Ibrahimaj said the government was ready to engage with industry representatives to develop appropriate support instruments following renewed calls from exporters.

The sector has faced pressure in recent years from the strengthening of Albania’s national currency against the euro, which has eroded competitiveness for companies operating on pre-agreed contracts, she said.

“The government is aware of the concerns of the garment and textile industry and remains in continuous dialogue with its representatives,” Ibrahimaj told Albanian Telegraphic Agency (ATA), adding that both the government and the Bank of Albania had examined ways to support the sector.

She said that while initiatives such as sovereign guarantees for investment had been introduced, longer-term resilience would depend on modernisation, automation and innovation.

Ibrahimaj identified closed-cycle production as a key factor in helping firms cope with exchange rate pressures and rising labour costs, adding that higher wages remain a government priority.

Industry representatives have also called for grant support through AIDA, though Ibrahimaj said available funds – around 1 million euros – are limited and primarily targeted at micro-enterprises.

She said a joint assessment by the government and industry would help identify firms in need of investment, automation and restructuring, forming the basis for a tailored support mechanism.

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Bank of Albania said that the net revenue of the country’s apparel and footwear manufacturing industry rose 25% year-on-year in 2022.

The apparel and footwear manufacturing industry is the third most important contributor to the country’s current account, after tourism and remittances.

The increase in prices last year had a significant impact on growth of the apparel and footwear exports.

Albania’s garment and footwear manufacturing industry is the base of the exports and it is accounted for around 40% of the total annual exports.

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