Economic growth and child labour: empirical evidence from Albania.

Business Systems Laboratory - 2nd International Symposium “SYSTEMS THINKING FOR A SUSTAINABLE ECONOMY. Advancements in Economic and Managerial Theory and Practice” January 23-24, 2014 Universitas Mercatorum Via Appia Pignatelli 62, 00178 Roma, Italy

Economic growth and child labour: empirical evidence from Albania. Fjona Zeneli PhD Student in Finance, Economic Faculty, University of Tirana, Senior Lecturer, Economics Department, Faculty of Economy, “Ismail Qemali” University of Vlora, Albania E-mail: [email protected]

ABSTRACT Known in the economic literature with the term of "Child Labour", this concept is considered an important factor in the history of the development of many countries, especially the least developed ones. The paper gives an overview of the importance of having children in psychology point of view (to support parents in old age period), in the economic one (in providing income for rural families dealing mainly with agriculture), also for the importance as one of the promoters at the beginning of the process of industrialization, the process that liked cheap and not very qualified work force. The paper take into consideration the case of Albania as a country in economic transition, trying to find an empirical relation between child labour and economic growth, this combined with legislation that protects the rights of children from inappropriate use at work for their mental and physical welfare. The data were provided for the period 1993-2013 (for macroeconomic variables as: GDP per capita, crude birth rate, net primary enrollment ratio, pupil-teacher ratio, the percentage of public spending on education), are processed with statistical programs (SPSS) to conclude in three regressive models that supports the theory of relation between the above variables. The main conclusion is that the case of Albania is a unique case due to the lack of legislation that protects the rights of children from inappropriate use at work (especially for the children of minorities).

Keywords: child labour, transition economy, ILO, Becker model.

2nd International Symposium “SYSTEMS THINKING FOR A SUSTAINABLE ECONOMY. Advancements in Economic and Managerial Theory and Practice” Rome 23-24, 2014 - Universitas Mercatorum

1 INTRODUCTION Child labour is an important global issue associated with poverty, inadequate educational opportunities, gender inequality, and a range of health risks. Child labour is defined by the relevant international conventions (UNICEF’s Convention on the Rights of the Child, International Labour Organization [ILO] Convention 138 and especially 182) not by the activities performed by the child, but by the consequences of such activities (exceptions are the so-called unconditional worst forms of child labour such as prostitution and bondage, as noted in ILO Convention 182). For instance, work affecting a child’s health and schooling should, according to these conventions, be eliminated. Identifying the health effects of child labour is essential because it enables policymakers to decide which types of child labour to target for eradication. The ILO estimates that there are approximately 250 million child labourers worldwide (2012), at least 120 million of them working under circumstances that have denied them a childhood and in conditions that risks their health and even their lives. Most working children are ages 11 to 14 years old, but as many as 60 million are between the ages of 5 and 11. Although the exact numbers are not known, available statistics indicate that approximately 96% of child workers reside in developing countries in Africa, Asia, and Latin America; there are also pockets of child labour in many industrialized countries. In spite of a reported decline in child labour during the period 1995 to 2000, child labour remains a major concern. Most child labourers begin working at a very young age, are malnourished, and work long hours in hazardous occupations; frequently they do not attend school. They receive very low wages or are unpaid, and their income or help is usually essential for family survival. They are mainly employed in the informal sector, with agriculture accounting for more children workers than any other sector. It is estimated that, in developing countries, at least 90% of economically active children in rural areas are employed in agriculture. Recent ILO statistics from 20 developing countries categorized the proportion of economically active children aged 5 to 14 years as employed in agriculture, animal husbandry, and related work at 74% (73.3% of boys and 78.8% of girls). The most obvious short term economic impact of child labour at the family is an increase in household income. In long term, the under accumulation of human capital caused by low school attendance and poor health is a serious negative consequence of child labour, representing a missed opportunity to enhance the productivity and future earnings capacity of the next generation. Child labourers grow up to be low-wage–earning adults; as a result, their offspring will also be compelled to work to supplement the family’s income. In this way, poverty and child labour is passed from generation to generation. Although child labour is recognized as a global health problem, research on its health impact on children has been limited and sometimes inconsistent. In 1998, Graitcer and Lerer published the first comprehensive review of the effect of child labour on children’s health by extrapolating data from the Global Burden of Disease Study. The occupational mortality rate among children matched the adult occupational mortality rate, such that the occupational mortality rate indicates mortality associated with child labour. In another study, in 2000, Graitcer and Lerer did not find


any differences in the health status of working and non working Egyptian children in the short run (the children were not followed to adulthood). A 2003 report on children’s work in Morocco, Yemen, and Guatemala, and a review developed on the context of Understanding Children’s Work Project provide an overview of the nature and extent of child labour, its determinants, and its consequences for the health and education of children in these countries. Several case–control and cohort studies have reported the association of child labour, impaired growth, and malnutrition. The elimination of the worst forms of child labour is crucial for the social stability and economic development. The term “economic activity” refers to children work; it includes all production activities, for the home or the market, undertaken by children, paid or unpaid. The data in different literatures suggest that child labour and poverty are inextricably linked. In countries with a gross domestic product of $ 1,000 per capita, there is a high degree of children workers; their total level reaches 40% - 60%, compared to 10% of the countries with the highest GDP. However, current data indicate that the labour force participation of children in the course of time has decreased. The objective is to explain that there is a negative relationship between economic growth and child labour, to evaluate the effects of development and economic growth, as measured by gross domestic product per capita, or GINI index on economic active children rate. The argument is as follows created by providing a summary of the theoretical and empirical literature on child labour for economic development in chapter 2; chapter 3 presents a review of empirical models from other authors, especially Becker Model. In chapter 4 it´s discussed the real situation in Albania, followed by the set of assumptions and empirical findings associated with economic interpretations and conclusions in last chapter.

2 OVERVIEW OF LITERATURE In this chapter, it´s discussed the role of economic resources and economic nature of child labour in a number of developed countries, continued in other sections and ended with the presentation of a summary report of the British and American history. 2.1 The role of children in economic development There are several main categories of economic benefits, property and non- property that children provide for their parents. Children are a source of old age, a source of instability insurance against the risk of income. 2.1.1 The financial support of the Third Age Children are valid when at least one of the following circumstances is characterized by: • Uncertainty of property rights. • The providing of credit when markets are uncertain.


• Insufficiency of public and private structures. • A good development of the labour market for women in distinctly areas. In these circumstances, when the adults rely on their children to support and improve financial security for old age, these factors should be important reasons on the fertility rate. a) Children as an alternative to land ownership Children, because of their defined cultural and economic role, may be invoked to limit the consumption of their parents, when property rights are insecure. Although as a substitute for the children, the land cannot be a perfect good and secure. First, there are some things that children can ensure that the land cannot provide, such as health care, physical and emotional support, as well as the psychological benefits. Secondly, the land is expensive to maintain, requires a high management and labour. However, one would expect that the ownership of the land will reduce dependency of parents on children; this is a source of insurance against disability in the future. In the context of uncertain property rights, the dependence of parents on children can be as important as would be the case without land of their parents. Uncertainty about the future outcome of land will lead to high fertility, as a means to maintain control of the territory. b) Imperfect capital markets In particular in rural areas, in the case of a crisis, farmers will want to borrow in the current period compared to expected revenue for the future. Borrowing on a bad season and saving in a good one, allow families to farmers to facilitate the consumption at any time. It depends on the agent's ability to borrow. If agents can access through adequate safeguards, it is unlikely that parents can save for their consumption needs in retirement. When is the most reliable means for mitigation and the accumulation of assets for use in old age, children are not of vital importance for security in old age. Children are a precious commodity in the context of imperfect credit and insurance markets, this is the result of: • Imperfect information by creditors to distinguish the risk of potential customers. • The lack of collateral, which limits the ability of credit to the poor, who have relied on informal sources of credit. c) The lack of welfare institutions The development of an effective system of social security, to reduce the dependence of parents on their children as providers of security in old age, can reduce the demand for children. If there are attractive alternative sources of support available for age, there would be lower motive in the increasing the fertility rate. d) The lack of a labour market for women When employment opportunities for women are not well developed, the elderly are most likely safe to play a more important role in the decision of individual fertility rate. This is especially true in rural areas, where women have a key role in the responsibility of raising the child,


household and general activities. In this regard, women can rely on their husbands for economic support and then to their children. Most parents expect old age support from their children, so the demand for child would be increased. 2.1.2 Security and stability of income In the developed world, many families are concerned about the risk of consumption. Weather includes environmental threats such as drought and flood risk of property, unemployment and the possibility of other diseases and dangerous sources can threat the normal growth of domestic consumption. In the absence of security markets and efficiency, alternative sources of risk coping mechanisms are available, such as the income of child labour. Parents can be influenced by the presence of such concerns for fertility decisions. In large families the risk can be subdivided over its members. Cain looks at the issue in his study in three Indian villages and in a village in Bangladesh. He found that in environments with great risk and where regulatory mechanisms are ineffective, the value of providing children acts as an incentive for high fertility.

2.1.3 Children as a source of labour Children labourers contribute their time to the production and the home maintenance. The potential importance of child labour will be more important in poor environments. Vicious circle hypothesis: The natural resources are managed as common property, and the use of overload can be a problem for the economy of life. When the traditional system of checks and balances isn´t respected, the community may be faced with the depletion of the natural resources. This is because of the private cost of using these resources to gather the best- but the cost is spreaded to the whole community in terms of land and poor water quality. If the children contribute to the family by gathering resources from common property resources, physical shortage means that children devote more time to the collection. This can potentially increase the demand for children. Pressures of the wider population will be based on resources; this would accelerate the rate of deterioration of the environment, increasing the demand for children and so on. This is known as the hypothesis of a vicious circle. Based on the principle that the polluter does not pay the full cost, parents do not have to pay the full price of child-rearing. Rather, they share these costs with the community. If a common approach to community resources continues, in which traditional methods are not effective control, parents can give birth to many children, and this would put pressure on the basis of environmental resources. If the community's resources are exhausted, the family has an incentive to expand the number of additional basic consumption of environmental resources. Unpaid housework: Parents in rural society are less concerned with the costs of raising children. Also, if the net economic value of the economic contribution of children is equal to the net cost of consumption of their children, the potential increase in demand for children will rise. Among the peasant families, children benefit from greater economic wealth and great lands abound. It


was found an empirical connection between the children and the farmlands (studied by Rosensweig, Evenson and Levy). In studies of rural India, Rosensweig and Evenson empirically tested economic importance of the contribution of children in agricultural soils. They found large land full of child labour. Farmers who cannot afford to hire employees rely on the work of the family. The technology for the production of non-commercial and subsistence agriculture requires only a minimum level of human capital. Desperately it´s accepted that having more children means the increase of domestic production. But even children cannot be expected to cultivate crops, they are more suitable for effortless tasks, freeing up labour by adults for more strenuous activities in the labour market. This is especially true for many mothers. For women who work outside the home becomes more economically developed, the children assume greater responsibility for household tasks such as maintenance and care of children. In his studies on the economic activity for the children in rural areas of Bangladesh, Cain found that high fertility is an economically rational choice for parents. Cain said that in the age of 12 years, the boys become cumulative and producers to offset their consumption over the age of 15 years.

How to earn investment incomes? If there is a market of child labour (in agriculture, domestic service, industry and the service sector informal), where children receive a salary, parents can have more children. This is because the net value in raising children is higher. Several studies confirm this relationship; the birth rate is higher in regions with higher wage tad. In addition, they argue that these variables are positively correlated with the return of child labour (such as agricultural productivity and the size of agricultural land) to have a positive effect on the demand for children. An increase in the efficiency of child labour will increase the supply of child labourers and increase fertility. The decision on the size of the family and children's use of time are made at the same time. The importance of this relationship is highlighted in Dessy (2000). Dessy maintains that the existence of a market for child labour would reduce the relative cost of children, which in turn, may increase the total fertility rate above the level that would have prevailed in the absence of a profit potential for the children. Fertility is sensitive to these economic incentives. When child labour is present, the net economic value of children is determined by the time and cost of goods for the child and rewards (profits of child labour, the production of non-market, domestic care, insurance against risk, and safety of the elderly).

2.2 Welfare Often, the children work because their role is to keep their family off from poverty and generating revenues that are needed. In his studies on child labour in India, for the urban informal sector Mittar Sharma founded that when child labour is included in income, 22.2 % of families are below the poverty line. Parents send their children to work in a tough economy. The link between child labour and poverty is well documented empirically.


In his studies on agriculture Vietnamese, Edmonds found that in the poorest households, child labour is highly inelastic with respect to expenses for capita. He finds a increased cost for residents. This is consistent with the importance of the income of child labour for the survival of the families below the poverty line. Ownership of land and other tangible assets are often associated with fertility in the agricultural population and especially small farmers. Farmers which rely on their family business tend to have larger families. In such circumstances, an increase in income is not offset by an increase in the opportunity cost of the time of parents; this is not accompanied by an increase in wage rates for adults or higher education adults. Marginal productivity of all members of the family is on the rise. This has been observed in some agricultural societies, such as India, Bangladesh, Iran, Philippines and Thailand.

2.3 The economic history of child labour " ... In the early factory system, child labour was the foundation of the industry ... (Cunningham and Viazzo, 1996) 2.3.1 Early industrialization and child labour In the literature of economic history the development in British and American experience was considered to be the first industrial movement in post- industrial economy. It was estimated that this move from a low level of development, in more advanced stages was characterized by a change in a remote economy in which production is primarily within the family consumption, towards an economy which produces for the market, as such are designated as national income per capita as a sufficient indication of the level of development. It is important to note here that, at first seems a narrow definition of what constitutes development as the structure of the economy and cultural aspects in its entirety. Table 2.1: Rates of labour force participation (for children) in the USA Employeed children of age 10-14 years old from 1870-1991, USA Year Activity rate (%) Real GNP 1870 16.00 23.1 1880 19.60 42.4 1890 21.40 52.7 1900 21.70 76.9 1910 17.80 120.1 Source: Estimates of employment for children are taken from Bureau of the Census (1997), USA However, for study purposes, this definition will suffice to show how the probability of production of child labour on different areas can also be high. The question then becomes to identify the variables that help to explain this phenomenon. In today's advanced industrialized economies, industrial development was the main factor in the initial increase in the rate of child


labour. For example, in the United States and the United Kingdom, women and children constituted a significant part of the workforce and production during the period of industrialization. After the American Civil War, the United States launched the program for rapid industrialization during the years 1870-1930. The number of workers aged 10-14 raised from 1870 to 1900 period around 1.75 million children in 1900, followed by a steady decline. This is illustrated in Table 2.1 above. Similarly, in the UK incomes women and children became an important component of family income. Although it is unknown whether children worked more pre-industrial, part children's workforce in many key industries grew significantly, in other words, the nature of work has changed in the expansion of the factory system. As the economy began to shift from production to consumption within the household production to market, children became winners of considerable salaries. In industrial areas, the income of the children was a major component of household income. In addition to data, Nardinelli presents some statistics specific to the textile industry. In the textile industry only children aged 10-13 years were employed in the United Kingdom, the steady decline in numbers from 1835 to 1860, and then increased, reaching a peak in 1874, when the number of children aged 10-13 years working in England in textiles reached 122,000. Other interesting results are presented by Horrell and Humphries. In their study of the household during the British Industrial Revolution, Horrell and Humphries have found that the number of children working in the labour market has increased and the age of participation into the workforce is reduced.

Table 2.2: The rate of participation in the work of children in England during 1850-1910 Employeed children of age 10-13 years old in United Kingdom Year Activity rate (%) Real GNP 1850 28.30 596 1860 28.60 791 1870 26.30 1.021 1880 19.00 1.379 1890 21.10 1.615 1900 16.90 2.032 1910 14.30 2.328 Source: Child Employment estimates are taken from Nardinelli (1990); historical estimates of GNP are taken from Chesnais (1992).


2.3.2 Child Labour Market Child labour supply: On the supply side, child employment in key sectors, such as mining and textiles, was the result of the desire of families to improve their standard of living. In this case, child labour is not necessarily a fact of poverty. Rather, sending children to work is a means by which families with low incomes can meet family income, taking advantage of opportunities wage, resulting from a greater demand for the job. Although the nature of the work children is questionable, the current consensus is such that the labour force participation of children has increased during the early stages of industrialization. Child labour demand: The historical experience of the advanced industrial countries suggests that the structure of demand determines the nature of child labour. Under the early factories system, child labour was crucial to the success of certain industries. The children were found in sectors of intense work and often dangerous. Their work was cheaper, and could potentially follow the salaries of adult men. Children replaced the work of adult males, adult male’s wages fell, and it resulted from a decline in demand for their services. In this way, the supply of child labour reduced the need for technological advancement. An example of this would be in rural areas, labour-intensive fruit plantations in California and Maryland. In certain industries kids were ideal. They were free to work, more willing to learn and not tight. Goldin and Sokoloff describe early American industry characterized by a high price for adult males work as a result of large agricultural machinery. Relative low productivity, initially for women and children work in agriculture was instrumental in disproportionate employment of women and children in the textile factories of early birth of North America. Firms replaced the work of adult males with relatively inexpensive women and child labour. Their employment was characterized by growing mechanisms in certain industries and largest organization working on others. As a result, continued industrialization, the relative wages of women and children were brought up with productivity growth. Accordingly, the labour force participation of these groups grew. As wages of women and children began to approximate those of adult males, companies began to replace the work of adult men and women with children. Changes on the structure of the labour market: Reduction in the supply of children for employment was a result of an increase in family income and declining demand for children is seen as a result of technological progress and greater intensity of capital. Salaries of children were no longer important to the success of these industries. The nature of the production required a more skilled workforce, changing age structure of the workforce. Similarly, in the UK, the age structure of the workforce had changed by the end of the nineteenth century. Children had little role in the new era industries, chemical industry, widely electricity. Children founded a demand for their services as messengers or newspaper delivery. This change was one of the greatest and lengthy economic forces. Technology changes increased the age of participation into the workforce and the importance of the economic contribution of children to family economic well-being fell as a result of increased wages of adult males. As standards of living began to increase rational choice was to invest in the education of every child to maximize income family, each child enters the workforce eventually to find a better job.


A decline in mortality rates resulted in fewer births; partly necessity of having more children to compensate for higher returns on human capital became more important. Becker explains the strategy following a decline of family child labour which will be discussed below. Return relative to investing in education may have begun to exceed the returns to child labour in the market. Besides the opportunity cost of time parents, schools and the difficulty of binding legislation factory is a greater cost to have children.

2.4 Chapter Summary In this chapter, it was presented a discussion on the role of children in families of different developed countries. Values of children and child return requirements will be determined by the family fortune. Family ability to smooth consumption over time and the presence of effective and equitable public welfare are also important determinants. Drawing on historical experience of advanced industrial countries, legal restrictions and economic factors have played a role in reducing child labour even though the legislation appears to have been less important. Industrialization process may have initially increased demand and the scope of child labour; however long run economic impact of the industrial revolution led to its eventual elimination, so the increase in the total number of working children was found to be as ephemeral phenomenon.

3 BECKER MODEL AND OTHER ONES 3.1 A Basic Model of Household Decision-Making A generic Becker type household decision model (1981) such as the one articulated by Rosenzweig and Evanson (1977), Portent (2001c), or Cignati and Rosato (2000) and summarized by Schultz (1997) assumes that the household acts to maximize utility, which is a function of the number of children, the schooling per child, the leisure time per child, the leisure of the parents, and a composite consumption good. These goods are produced using a composite commodity purchased in the market place and the time of household members. The time inputs to produce the composite consumption well can be supplied by the mother or by the children. Household income can be earned by selling goods produced in a household enterprise or by working as a wage labourer. Inputs to the production of the household enterprise good include physical assets owned by the family and by parent and child labour. Markets for labour, goods, and capital are taken to be perfectly competitive, at least initially. The husband allocates time between market work and leisure; the mother allocates time among market work, child rearing, and home production; and children allocate time among market work, education, leisure, and home production. Uncompensated cross-elasticities in this model concerning children are the following:  An increase in the father’s wage will lead to substitution toward the child’s education if the child’s education and the father’s leisure are substitutes; also it will raise household income. If a quality-child is a normal good, then education will rise.


 

An increase in the mother’s wage increases the opportunity cost of each birth will raise the demand for all normal goods. Quality children may be among these, in which case educational attainment will rise. An increase in the child’s wage works through several channels to alter the amount of education. First, it raises the opportunity cost of time spent in school. Second, an increase in the child’s wage raises the return to each birth.

3.2 The cost of raising children in developing countries Compared with developed industrial countries, the cost of raising children in a developing country is low as a result of lower costs in time. The price of housing and the price of inputs for the child are relatively low, for example, in the isolated areas where transportation costs are high, inputs for the child, such as food, clothing and housing produced in the country and are relatively cheap. The cost of time for parents refers to the cost of time spent raising children and in particular, the amount of time the mother, so the opportunity cost of raising children refers primarily mother profits from previous payments and leisure, and lost opportunity for pursuing further education . The low level of development is characterized by low human capital and thus, a low level of wages for adults, especially for women. Besides the cost of schooling for children is high due to the high economic value of children and thus, the opportunity to invest in the education of the child has a very high cost. In economies with the above characteristics, increasing income may not mean declining fertility. An economy in an early stage of development can be characterized by a positive relationship between income and fertility. Low cost of inputs for the child associated with low opportunity cost of perpetuating a high fertility rate, especially when children are economically active. At a low level of development, where the main cost of raising children is the money spent on basic inputs for the child brings to the demand for children to be high. The contribution of children is important for the family. When the time for children has economic value, the net cost of children is lower compared to an economy in which children do not have the income potential and the total fertility rate may be high. Low cost of raising children associated with high productivity children can result in a larger size family as against net cost of children is low. (1) Net cost of children = (present value of the cost of money) + (actual value of women's time) - (present value of expected cash return) + (actual value of time children home services) In an advanced stage of development, the net cost of raising children is high. Children are steady customers, so assuming that children have some other internal values they provide to their parents. In a low development level, we would expect that the net cost of children to be negative. Children are stable customer, so families receive income from their work and the cost of raising children can be very low. In the long term economic development, market production methods become less compatible with the capabilities and strengths of the child. Families go as far as to have more children and to invest in any of them.


Referring to the figure 3.1 when the growth rate increases salaries for children, ceteris paribus, the opportunity cost of time spent on non-market activity increases. For a high salary of children, the marginal benefit from an extra unit of market activity is not less than the marginal cost. Children will spend less time engaged in market activity and not a lot of time working in the market. If the child is normal wages so low that it falls below the level required to produce equality MB=MC, wclow , children will not be on the market at all or they will work fewer hours. In figure explain the case for a child who continues to work in the market, but it takes more work to household income. Figure 3.1: Effects of change in the child's salary allocation of their time

Keeping constant wage for children, an increase in household wealth it´s represented by a parallel shift in the yield curve right marginal benefit it brings to families can consume goods and services over z family is able to buy more goods market and can afford to spend less time working. For an increase in the wage rate of a parent, the implication for children is such that they will spend less time on the market and more time at home, perhaps taking time off and attend school, a pure effect income. Figure 3.2 : Effect of income not change the allocation of work time child

According to the results, working children lead to increased productivity house works, or reduction. The direction will depend on how much will be the percentage of children who work in the market. In a major development progress, the market provides opportunities for children. Further, a great increase in expected household income including variations in terms of income and other factors kombunuar with rising costs is an opportunity for human capital investment in children. Poverty and productivity of the children who work to ensure a supply of children in the


labour force, which is still a very big cost for the education of children. High productivity of adult males from different sectors will lead to many markets, opportunities for women and children in different countries. An increase in women's wage rate will increase family income, one would expect that the cost of raising children increases as women grow values. The possibility of a higher cost for the child will reduce fertility so that the substitution effect dominates the income effect. However in the case of a larger family, economically weak, even as the mother's change of market production, it is possible that adolescent children (especially girls) to take home the responsibility to compensate the presence of their mothers. This can bring huge cost to educate adolescents. A steady growth in revenues and an improved standard of living will reduce the economic value of children. Return to the education of children begins to exceed the return of the child labour market. We would expect a decline in child labour and the demand for quality child will grow.

3.3 The Quality-Quantity Trade-Off Most, theoretical analyze is hypothesizes a tradeoff between the quantity and quality of children, as reviewed by Schultz (1995). However, Rosenzweig and Evanson (1977) allow the quantityquality tradeoff to emerge as a by-product of the impact of the mother’s wage on the number of children. In this case, the increase in the mother’s wage raises the opportunity cost of the labourintensive enterprise of raising children. The fall in the number of children in the family frees resources available to increase child quality. For example, the services that children provide to their parents may be defined as the product of the number of children and their average quality. In that case, quality and quantity are inherently substitutes. However, Cigno and Rosati (2000) note that this depends on the presumption that the net cost of a child is negative. 4 SITUATION IN ALBANIA Albania was a member state of the ILO from 1920 to 1967 and is again member since 1991. The country has ratified 44 ILO International Labour Standards (Conventions), including the eight fundamental Conventions. The National Child Labour Survey (NCLS) in Albania estimates in 2012 that 57,000 children or 8.2% of 5-17 year-olds, are economically active. The employment rate among children is estimated to be 7.7%, where boys tend to have higher employment rates that girls, working with an average of 18.7 hours per week. The survey showed that a sizeable proportion, 40.9%, of children engage in unpaid household services. This proportion increases with age, reaching 68.8% among children aged 15-16 years. Overall, children spend an average of 7.2 hours per week engaged in unpaid household services. The main reasons for children being engaged in work include poverty, parents’ unemployment or migration, disrupted family environments, mentality of parents, poor school attendance, lack of schools near the residence area, expulsion from the school and general poor performance and dislike of the school.


The Government of Albania has adopted a national plan and legislation that outlines concrete steps to achieve the elimination of the worst forms of child labour by 2016. Although there is some protection for children in the Albanian Labour Code, these are only applicable to employment through a contract. The problem is that many working children, such as agricultural workers, are not covered by a contract. Children, primarily Roma, continue to be used in road work and forced begging. Table 4.1: Statistics for the children who work and attend school Children which:

Age (years old)

%

Work Attend school Combine work and school Source: INSTAT, 2005

6-14 5-14 7-14

19.0 91.0 20.5

According to the Children’s Human Rights Center of Albania (CRCA) estimates released in 2010 show that more than 50,000 children under the age of 18 worked at least part time. The majority of child labourers worked as street or shop vendors, beggars, farmers or shepherds, drug runners and factory workers. Research suggests that begging starts at a very young age--as early as four or five years of age. While the criminal code prohibits the exploitation of children for begging, the police rarely enforce this law. According to UNICEF’s State of World’s Children Report (2011) in terms of documented rates of child labour between 2000-2009 in Albania, the percentage of children aged between 5–14 years involved in child labour was recorded at 12 percent (14 percent males and 9 percent females.) In a publication by the Center “Children of Today,” the rate of child labour for children 5-14 years old stands at 23 percent; however, ILO, referring to INSTAT data, declares that 32 percent of children 6-17 years old work. The worst forms of child labour in Albania can be found among street involved children, traficked in children, children involved in illicit activities, children working in the formal sector and children working in the agriculture sector.

4.1 Spread and distribution of the worst forms of child labour Children in Albania are engaged in the worst forms of child labour, including road works and forced begging, in some cases. Street children work on car washing and shoes selling. Adults use children as forced beggars, asking them to be on the streets or go door to door. Some children may work long hours, often until it’s get late. Children can be exposed to numerous risks, including severe weather, vehicle accidents and criminal elements. Children in Albania are also employed in the textile and clothing industry. Some are directly employed in the factories, where they are exposed to heavy machinery and chemicals, where they work for long hours and suffer from poor visibility due to areas poorly lighten at work. Children also work in agriculture and mining, where they are exposed to chemicals. Children work in the construction sector using dangerous equipment exposes them to the risk of injury. Children in Albania, mainly girls, are trafficked for sexual exploitation and forced labour,


including begging. Studies show that children from ethnic minorities and Roma constitute the majority of Egyptian street children and victims of trafficking. Traditionally, these communities have suffered from marginalization and discrimination is widespread, this has contributed to their acute poverty and difficulty in accessing social services.

4.2 Poverty and living standards There are significant inequalities on economic development in different geographical areas. There is a high profile of poverty in the country, accompanied by significant regional disparities, which show a strong correlation between unemployment and poverty. In 2001, 77.3 percent of the workforce was employed and 50.5 percent of the population was still working in agriculture. An unemployment rate of 22.7 percent was the highest in the region and the situation was even worse in some districts, where unemployment was more than 40 percent. The poverty rate is also reflected in the number of families receiving social assistance. In 2003, 148,000 families were below the social assistance scheme. High levels of poverty and social exclusion were affecting individuals, families and groups of the population. It is difficult to measure social exclusion, but evidence shows that poor communities tend to be at risk. Statistical data on housing conditions of families show that only 15 percent of rural households have indoor running water, while 20 percent do not have access to water at all. There are wide differences in regional services reflected in the basic living conditions, such economic disparities, especially in rural areas, providing a context in which abuse of children is held.

4.3 Education Despite the positive efforts by the government to pass legislation to improve the quality of teaching and teachers, education system faces a number of challenges. Many school, especially in rural areas, are in poor physical condition with shortages of heating, lighting and other facilities. In many cases there are enough qualified teachers basis, and there is a growing gap between urban and rural education. Education indicators are low and there is a tendency for levels to steadily diminished. Since the early 1990s there has been a considerable decline on registration: Gross enrollment rate for primary schools in 2000 was 90 percent. This variable is about children who went to school, but did not succeed in their studies. The number of children leaving school was reported to be significantly less than the number of students dropping out from hiding, in some regions falling hidden opposition estimated that a third of the total number of children attending primary school. Children most at risk are: • Children from rural areas with a low socio – economic level in their families. • Children in remote areas who do not attend school regularly. • Girls from remote areas, kept at home because of arranged marriages or revenge.


• Children that have migrated with their families and turned, unable to return to school. Table 4.2: Students who droped school 1990/1991 -1998/1999 Years

1990/91

1991/92

1992/93

1993/94

1994/95

1995/96

1996/97

1997/98

1998/99

Total no.

21,710

34,232

21,532

20,939

17,134

17,162

18,300

19,610

-

%

3,9

6.31

4.09

4

3.11

3

3.2

3.5

3.01

Source: INSTAT, 2005

4.4 Profiles demographic and socioeconomic of major cities Tirana, Vlora, Elbasan, Korca are among the seven most populated and together account for 62 percent of the urban population with a high level of unemployment. There is a visible presence of Roma and Gypsy in all these four cities. Statistics for these communities are not available, the 2001 Census has not documented ethnicity. However, based on indirect data, it is estimated that around 120,000 Roma live in Albania. The number of Gypsies is even higher. Groups suffer discrimination not only social, but also a high level of illiteracy, poor health and lack of employment opportunities. Their children constitute the most marginalized and abused, easily targeted by traffickers. Tirana, the capital and largest city by population (INSTAT, 2005). The people are very heterogeneous, as a result of internal migration, about 45 percent of the cash arrived in Tirana. The average density for the city is 80 times higher than the national average of 8161 people per square kilometer. While Tirana has the highest level of education in the country, 10.6 percent of the population has not completed eight years of schooling or illiterate. Unemployment is high in Tirana: 25.3 percent in 2001, from 9.1 percent in 1989. Only 45.8 percent of the working age population is employed and about 26 percent of these employees are temporary , seasonal or casual work do (INSTAT, 2005). In areas with higher unemployment rates and poverty and low education have been populated mainly by newcomers from other parts of the country. Tirana has the largest number of street children living and is an important source of child trafficking. Elbasan is located in central Albania, last seen demographic movements compared to other cities. According to state social services, Elbasan is one of five cities most affected by poverty. There are around 18,000 unemployed and limited employment opportunities are scarce since the closure of metallurgical factory. Vlora located in southwest, ranked sixth in terms of population (INSTAT, 2005). During the 1990s, it experienced significant changes in economic activity that leads to a high level of unemployment, even though the official rate is 13 percent. A large number of families that have members living abroad, mainly in Italy, and their remittances serve as a major source of income. Social helps were given up to 8 percent of households. The collapse of pyramid schemes in 1997 drastically worsened the situation in this region compared with other countries.


Korca is a town in the south - eastern part of the country. Between 1992 and 2002, many locals traveling legally, mainly in Greece. There are 17 090 children under 18 years old. 20 percent of the population is unemployed and 17 percent of families live with economic assistance (INSTAT, 2005).

5 DATA PROCESSING AND EMPIRICAL CONCLUSIONS 5.1 Hypotheses and regression models H1: child labour% = f (Economic growth) where % cl is the aggregate percentage of child labour. According to the ILO, this is the number of children from 10-14 years active in the labour force divided by the total number of children in this age group, expressed as a percentage (economically active children). GDP/capita - a measure of the total output of a country that takes the gross domestic product (GDP) and divides it by the number of people in the country, an indicator of welfare of the population. It is obtained the first regressive model that expresses the relationship between aggregate percentage of child labour % cl and GDP/ capita as an indicator of economic growth of the country. The model is as follows:

% cl =

0.475 – 0.032*GDP/capita

R2=0.942 R2k=0.937

St.dev. 0.014 0.002 T-Statistic 33.208 -13.402* The first model is simple regressive form as above. GDP per capita variable is selected as determinant, to support the hypothesis according to the paper. We see that the relationship between two economic variables is negative, as expected, an increase in the welfare of the individual (expressed in GDP/ capita) leads to decrease in the percentage of children 10-14 years category, actively involved in the workforce . This social phenomenon explains the high salaries of parents, enough for the needs of the family without children engaged in labour market. This finding supports the preliminary hypothesis model based with a statistically significance (Fisher statistics F = 179.6).

H2: child labour% = f (Economic growth, Legislation, Education budget) The model is extended with other variables that are considered statistically significant to the second hypothesis such as:


Gini index - is a measure of statistical dispersion intended to represent the income distribution of a nation's residents. PSE- ( Public spending on education) – as a percentage of government expenditure. ILO_134, ILO_182 – dummy variables related to ILO Convention ratification from Albania, about minimum age and the worst form of labour. R2=0.976 R2k=0.968 % cl = 1.042 -0.043*GDP/capita–0.06*Gini– 0.053* PSE – 0.025*ILO_138 – 0.022*ILO_182

St.dev.0.063 0.002 T-Stat.16.61 -2.161*

0.002 -2.65*

0.007 -8.08*

0.012 -2.119*

0.014 -1.494

The model supports the second hypethesis statistically (Fisher statistics F = 114.309). It´s free of strong multicolinearity ( also VIFi