Being utilised little as resources for the economic and social development of the country, remittances may have led to individual, family or local dependency. During the first stage of transition in Albania policies for optimising the administration and utilisation of workers’ remittances for developing purposes have been completely lacking. A few sporadic measures have aimed at driving workers’ remittances into official channels and improving savings and investments incentives of emigrants in the country but have been by and large inadequate. More recently, the Albanian government has taken a more attentive approach toward remittances and their potential contributions in financing the growth and development of the country. With the assistance of the European Union by means of CARDS program, and the support of the International Organization of Migration (IOM), this year the Albanian government has compiled two important documents regarding migration and remittances issues, called: National Strategy of Migration and Action Plan. The main objectives are: (i) the review of remittances flows and (ii) the identification of political constraints and institutional and regulative framework that influence these inflows, in order to: •  increase the volume of remittances;  •  help shifting them into formal channels; and  •  enhance their use in support of country’s economic growth. Bank of Albania role in achieving these objectives consists primarily in maintaining the macroeconomic and financial stability, which constitute important preconditions for the success of any policy related to workers’ remittances.

But in the early 1980s, rapid wage increases outpaced productivity gains, and when the international economy turned down in 1985, we fell into a deep recession. We had lost competitiveness vis-à-vis other regional economies. NIE to First World The 1985 recession forced us to reassess our economic policies. We formed the Economic Committee, whose report refocused our growth strategy. To restore our cost competitiveness, we reduced employer CPF contributions (from 25% to 10%), and implemented two years of wage restraint. We began making wages more flexible, by introducing variable components into remuneration packages and cutting back on seniority-based pay. We cut direct taxes sharply (from 40% to 33%), and laid the ground for introducing the GST a few years later. Competitiveness and flexibility became important yardsticks for economic policy and collective bargaining. In our overall development strategy, we put more emphasis on the services sector as a major growth engine, alongside manufacturing that had long been a key driver. In manufacturing, we made a conscious effort to assimilate and adopt new technology from the advanced economies, moving up the value chain as our incomes and capabilities rose. These policy changes worked better than we had hoped for, aided by favourable external conditions. East Asia was undergoing an economic boom, the global electronics industry was expanding rapidly, and the US economy was experiencing its longest post-war recovery. For a decade until the Asian financial crisis broke in 1997, growth averaged 9.2% a year.