Albania’s Human Capital Investment: A Strategic Partnership for EU Integration and Sustainable Development

This October marks the 80 years since the founding of the United Nations - enshrining humanity's commitment to peace, human rights, dignity, and development. As the world works toward the 2030 Agenda and the Sustainable Development Goals (SDGs), Albania’s journey shows how investing in people drives progress.

From the Global Digital Compact to the Transforming Education Summit, the message is clear: human potential is the real engine of change. For Albania, on its path to EU membership and facing new demographic challenges, this anniversary is a reminder that the country’s greatest strength — and the key to its future — lies in its people, especially its children and youth.

As Albania advances toward EU membership with the implementation of Reform Agenda 2024-2027 and with renewed financial support through the EU Growth Plan, the country faces a defining challenge: unlocking the full potential of its people. The Government Programme 2025-2029, emphasizing human capital development through digital transformation, creates unprecedented momentum.

Strong political will, governance reforms, and institutional accountability ensure investments translate into outcomes. According to the World Bank's Human Capital Index, Albanian children born today will reach only 63% of their potential productivity, below the regional average of 69%. The EU, UN, and World Bank in Albania stand ready to support people-centered interventions viewing human capital as the core driver of sustainable growth.

The Challenge and the Opportunity

Albania's 2023 Census revealed a population decline to 2.4 million - a drop of 420,000 since 2011 - driven by emigration and low fertility of 1.21 children per woman. With poverty affecting 19,2 percent of Albanians and child poverty at 26.6 percent (2024), targeted investments can break intergenerational cycles while building the skilled workforce Albania needs.

Current underinvestment is stark. Education spending at 3.1% of GDP. Social protection at 9.6% of GDP lags the EU average of 20.5%. These gaps represent strategic investment opportunities.

Building the Foundation: Early Childhood Development

With only 15% of Albanian children under three in early learning programs - versus the EU average of 35.5% - Albania is missing its most powerful opportunity to shape prosperity.

Quality pre-primary education builds learning aptitude that compounds throughout life. The 2022 PISA scores, showing 15-year-olds lagging OECD peers, underscore the urgent need to strengthen foundations.

Strategic expansion demands quality improvements integrating contemporary child development understanding, teacher training, and 21st-century learning environments. Building on the EU Child Guarantee, investments could leverage Albania's 96% mobile penetration for innovative parent engagement. Progressive home visit models transform social protection into empowerment.

Empowering Youth: Skills and Employment Transitions

With 22,2 percent of youth aged 15-29, neither employed nor in education - far exceeding the EU average - comprehensive intervention is urgent.

As Albania embraces digital transitions, digital literacy investments become paramount. Joint SDG Fund programmes – LEAP (Lifelong Empowerment and Protection), DART (Digital Agriculture and Rural Transformation), and the Multi-Generational Approach - demonstrate integrated interventions addressing employment, skills gaps, and social inclusion. LEAP's alignment with over 160 million euros in co-financing - including EU Reform and Growth Facility funding and Youth Guarantee programmes - creates transformative investments reinforcing human capital. Sector initiatives like the tourism roadmap extend social protection to seasonal workers while creating pathways to decent work.

Enhanced Youth Guarantee programs with career centers could significantly improve outcomes. Engaging the diaspora and facilitating return migration unlocks valuable skills and innovation. These must couple with developing high-value sectors - IT, renewable energy, digital services, sustainable tourism - providing meaningful careers and retaining talent.

Strategic Actions for Transformation

Inclusive human capital development - grounded in social cohesion, equality, and leaving no one behind - must guide interventions. Success demands joint action from government, civil society, private sector, and international partners. Strategic allocation must prioritize quality alongside access. Teacher professional development, after-school programmes, and coaching systems could enhance outcomes.

For labor markets, attention must focus on women's and vulnerable groups' participation. A Care Economy approach expanding childcare services could increase female labor participation from 61.6% toward regional benchmarks. Investment in child and eldercare addresses Albania's demographic challenge. With aging nearing 20%, Albania pioneers an "Economy of Dignity" in long-term care - redesigning services as both social right and employment opportunity.

Social protection systems offer transformation into developmental platforms. The National Social Protection Strategy 2024-2030, with €2.5 billion allocated, represents significant potential if directed toward human capital enhancement. Integrated support linking families to healthcare, training, education, and employment is what transforms assistance into empowerment.

These strategic investments should yield measurable improvements over the medium term: PISA scores rising 25-30 points, youth disengagement decreasing toward the EU target of 9%, and reduced child poverty. Robust monitoring and evidence-based reporting will demonstrate progress as Albania advances through accession negotiations.

The Path Forward

The window for demographic intervention remains narrow, but decisive action today determines Albania's competitive position for decades. Strategic investments are a necessity for resilience, innovation, and peace.

We — the EU, UN, and World Bank in Albania — remain committed to deepening our partnership with Albania, working not merely as donors but as collaborative partners for impact. This partnership vision directly echoes the ambition of the forthcoming Second World Social Summit held in Doha from 4 to 6 November—to renew the global social contract by placing people, inclusion, and equity at the center of sustainable development, ensuring that no one is left behind in realizing the Political Declaration’s call for a human-centered future.

By placing human capital at the heart of its development agenda - emphasizing early childhood development and youth empowerment - Albania can unlock its people's full potential, drive sustainable growth, and chart a course toward prosperity making EU membership meaningful beyond institutional reforms. The journey requires sustained commitment, but the rewards - a skilled workforce, dynamic economy, and equitable society - make it essential for Albania's future in the European Union.