PUBLIC EMPLOYMENT POLICY-4 Emergence and Development of Public Employment Policies in Turkey-2

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Berna Özgür Reza
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1 PUBLIC EMPLOYMENT POLICY-4 Emergence and Development of Public Employment Policies in Turkey-2 Borrowed from Esen Çağlar s presentation at TEPAV in Prof. Dr. Doğan Nadi Leblebici

2 Unemployment problem can be perceived as: 1. an issue of economic development, 2. a social problem. When it is perceived as a problem of economic development, the solution of the problem is found in economic development policies. When considered as a social problem, it becomes a public policy area on its own and it forces the state to produce policies in this direction.

3 For Turkey, the problem of unemployment has been considered as an economic development problem for many years. In fact, there are three basic approaches to solving employment problems: 1. The flexibility of the labor market- Maintaining existing jobs, and work life. 2. Passive labor force policies- Regulations (like unemployment insurance) 3. Active labor force policies- The need for creative destruction process and skill transformation- Skills acquisition and training policies for newly admitted young people.

5 Increasing per capita income in economic terms is also closely related to employment policies. Increase in per capita income depends on increases in three factors: 1. Ratio of working population within total population (demographic window of opportunity) 2. The fact that the working age population has a real job (the participation of women and men in the workforce) 3. Labor productivity

6 Turkey's goal is to achieve the Lisbon employment rate target by 70% in 2010, based on its current capacity.the employment rate in Turkey is 44% as of It is necessary to create 14 million jobs by 2010 for the Lisbon target. With Turkey's current GDP and employment growth rates, Turkey can create only 1.5 million jobs by By 2017, the employment rate has increased to 48%. As you can see, Turkey is far from the target in 2010.

7 The seven elements that differentiate Turkey's employment policies from the EU are: 1. The normalization process of the agricultural sector TR: GNP 11%; employment 35% EU: GDP 2%; employment 4% 2. Private sector is experiencing fast transformation process - Transitions between sectors 3. Population increase in the working age 4. Participation of women in the workforce 5. High amount of informality (50% of jobs) 6. Size of regional differences 7. Qualitative differences - workforce that cannot compete globally

8 How should the framework of employment problem look like? How could the capacity be increased? Supply part - Decline in agriculture - Transitions between sectors (creative destruction, modernization) - The working age population increase - Women's participation to workforce - The qualifications that can meet the workforce demand Demand part - Demand for goods and services (general economic performance) - Rising competition pressure, competitive power - Changing the way of doing business; new skill request- Investment and business environment; investment appetite

9 HOW DO CHANGES IN ECONOMY REFLECT ON LABOR MARKET? PRODUCTION OF MANUFACTURING INDUSTRY, INTEREST RATE AND INFLATION RATE MANUFACTURING INDUSTRY INTEREST RATE INFLATION

10 UNEMPLOYMENT RATE, SOURCE: TUIK

12 THOSE WHO LOST THEIR HOPES TO FIND A JOB (15-24 OLD AGES)

13 RATIO OF THOSE UNEMPLOYED MORE THAN ONE YEAR

14 İş arama sürelerine göre işsizler, Temmuz 2016, Temmuz 2017 Unemployed by duration of unemployment, July 2016, July 2017 [15+ yaş - age] (Bin kişi - Thousand person) Toplam - Total Erkek - Male Kadın - Female Toplam - Total (%) Erkek - Male (%) Kadın - Female (%) İş arama süresi Duration of unemployment İşsiz Unemployed ,0 100,0 100,0 100,0 100,0 100,0 Bir yıldan daha az süreli işsizler Unemployed less than one year ,1 78,5 83,5 83,6 75,1 72,1 1-2 ay 1-2 months ,6 48,9 52,2 54,2 41,0 42,3 3-5 ay 3-5 months ,3 17,6 19,1 18,2 19,5 16,8 6-8 ay 6-8 months ,5 8,4 8,5 7,8 11,0 9, ay 9-11 months ,7 3,6 3,8 3,5 3,6 3,8 Bir yıl ve daha fazla süreli işsizler (Uzun süreli işsizler) Unemployed one year or longer (Long-term unemployed) ,9 21,5 16,4 16,4 24,9 27,9 1 yıl ve daha fazla, 2 yıldan az 1 year and more and less than 2 years ,1 15,6 11,7 12,6 17,6 19,5 2 yıl ve daha fazla, 3 yıldan az 2 years and more and less than 3 years ,3 3,9 2,5 2,1 4,5 6,0 3 yıl ve daha fazla 3 years and more ,5 2,0 2,2 1,7 2,8 2,4 TÜİK, İşgücü İstatistikleri, Temmuz 2017 TurkStat, Labour Force Statistics, July 2017 Tablodaki rakamlar, yuvarlamadan dolayı toplamı vermeyebilir. Figures in table may not add up to totals due to rounding.

15 EMPLOYMENT RATIOS OF TURKEY AND EU

16 Why are the working-age people excluded from the labor market? 1. Individuals who do not hope to find a job are not included in the workforce 2. Migration from the village to the city removes women from the workforce. It is believed that due to the low wages, there will be more contribution to the family budget through housework and childcare.

17 3. Early retirement pension due to low retirement age 4. Due to the limited part-time working culture in Turkey, it has to be completely out of the labor market 5. Because of the widespread unregistered employment, the reluctance created by not being able to go under the social security umbrella

18 IN URBAN AREAS, ONE OF THREE PEOPLE IS INFORMALY WORKING. IN RURAL AREA, THREE OF FOUR PEOPLE ARE INFORMALY WORKING. INFORMALITY MOSTLY EXIST FOR THOSE SUCH AS FAMILY WORKERS, SELF EMPLOYED, DAILY PAID ONES. PRODUCTIVE EMPLOYMENT TYPES ATR ACTUALLY FORMAL.

19 IN URBAN AREAS, ONE OF THREE PEOPLE IS INFORMALY WORKING. IN RURAL AREA, THREE OF FOUR PEOPLE ARE INFORMALY WORKING. INFORMALITY MOSTLY EXIST FOR THOSE SUCH AS FAMILY WORKERS, SELF EMPLOYED, DAILY PAID ONES. PRODUCTIVE EMPLOYMENT TYPES ATR ACTUALLY FORMAL.

20 INFORMALITY IN EMPLOYMENT BY AGE GROUPS,

21 THE HIGHEST MINIMUM WAGE IS IN TURKEY, 2006 MINIMUM WAGE/ VALUE ADDED PER EMPLOYEE

23 İstihdam edilenlerin sosyal güvenlik kuruluşuna kayıtlılık durumu, Temmuz 2016, Temmuz 2017 Employment by status in social security registration, July 2016, July 2017 [15+ yaş - age] (Bin kişi - Thousan d person) Toplam - Total Erkek - Male Kadın - Female İstihdam Employment Kayıt dışı oranı Unregistered rate (%) İstihdam Employment Kayıt dışı oranı Unregistered rate (%) İstihdam Employment Kayıt dışı oranı Unregistered rate (%) İşteki durum Employment status Toplam - Total ,3 35, ,4 30, ,7 47,0 Tarım - Agriculture ,2 84, ,1 75, ,1 94,7 Tarım dışı - Non-agricultural ,8 22, ,1 21, ,6 25,0 TÜİK, İşgücü İstatistikleri, Temmuz 2017

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