The AI Transition: Assessing Vulnerability and Structural Reform in Albania’s Labor Market

Abstract Artificial intelligence (AI) is increasingly reshaping patterns of work in Albania, both through visible forms of automation and more subtle transformations in productivity and skill requirements. While certain occupations are experiencing displacement as tasks become automated, others are benefiting from efficiency gains enabled by AI-driven technologies. This study examines these parallel dynamics using empirical evidence drawn from official labor market statistics, business surveys, and selected case studies. The findings indicate that overall employment levels in Albania have not declined sharply; rather, structural shifts are occurring within specific occupational groups. Routine service and administrative roles appear particularly vulnerable, while employers are raising expectations for digital literacy, basic data competencies, and advanced communication skills. These changes are unevenly distributed across the workforce, disproportionately affecting younger workers and individuals with lower levels of formal education. The primary aim of this paper is to provide policymakers with an evidence-based assessment of Albania’s labor market transition in response to AI adoption. The analysis underscores the need for increased investment in education, targeted upskilling initiatives, and flexible retraining programs to mitigate inequality and support workforce adaptation. As technological change accelerates, the key policy challenge lies in ensuring that economic advancement is accompanied by inclusive labor market outcomes.