Looking for a lasting remedy to Turkey's unemployment problem

Unemployment reached a yearly rate of 14 percent in 2009, up by 3 percentage points compared to 2008, as investors pulled their money out of Turkey amid global uncertainty. This 14 percent amounted to 860,000 individuals, many of whom are below the age of 25 due to the incredibly large share of youth in Turkey's population. Although Turkey is showing signs of economic recovery, like many countries, the ranks of the unemployed will continue to haunt policy-makers long after the recovery of other macroeconomic indicators.

A clear solution to the unemployment problem is not on the horizon, with many structural issues needing to be overcome before serious steps can be taken toward shrinking the number of people out of work and looking for work.

The public and private sector along with civil society and business organizations all have their own ideas about the most important barriers that need to be overcome. Speaking to Today’s Zaman, many of the most prominent individuals in Turkey’s economy shared their thoughts with us about what they wanted to see done to solve this unemployment problem.

‘Unemployment is not just a number’

Labor and Social Security Minister Ömer Dinçer stated that although 2009’s 14 percent unemployment rate was slightly better than the expected 14.8 percent, the problem is difficult, stating that it was no longer the case that increased production automatically meant increased employment. “As modern agricultural techniques were introduced, unemployment increased. On the other hand, technology and automation is becoming more advanced; therefore, the understanding that increases in production will lead to an improved employment situation is no longer the case,” Dinçer said. He noted, however, that he was against giving families monthly unemployment income support as is done in Europe, though he highlighted that through the Prime Ministry’s Social Assistance and Solidarity Foundation, TL 200 per month has been provided to families without an income source and that approximately 7 million people are currently benefiting from this.

The president of the biggest business organization in Turkey, Turkish Union of Chambers and Commodity Exchanges (TOBB) head Rifat Hisarcıklıoğlu, said one of the biggest problems with unemployment is due to a lack of trained professionals in the population. He stated that without supporting vocational schools, the unemployment problem could not be solved. Regarding economic growth, Hisarcıklıoğlu said a 4 percent growth rate would not decrease unemployment and a bigger goal of 7 percent is needed. “Between 2003 and 2008, the number of employed individuals increased by 3.2 million. This means that if we can protect the stability of this country and focus on structural reforms, we can increase employment,” said Hisarcıklıoğlu.

Turkish Exporters Assembly (TİM) President Mehmet Büyükekşi also echoed these views, stating that a lack of qualified workers led to a greater increase in unemployed individuals. He also added that many businesspeople looking for workers were having difficulty finding qualified laborers. He added that labor-intensive sectors such as textiles, apparel and leather goods must have the barriers in front of them lifted to have the potential to employ a large segment of the unemployed. Turkish Confederation of Businessmen and Industrialists (TUSKON) President Rızanur Meral offered a different perspective on the issue, stating that Turkey needs to reorient itself toward the services sector. “Investments in this sector are growing globally, and we can’t ignore this field. … We need to support sectors such as health and tourism.” He added that the Council of State’s decision regarding a penalty applied to the university entrance exam scores of graduates of vocational schools has created a large barrier for both employment and the business world in Turkey.

Independent Industrialists and Businessmen’s Association (MÜSİAD) President Ömer Cihad Vardan also shared the sentiment on vocational education, stating that policies need to be re-evaluated. He also stressed that a national employment strategy should be revamped, highlighting that short, medium and long-term goals for unemployment can help relieve this problem.

Social security premiums create burden

İstanbul Ready-to-Wear and Apparel Exporters Association (İHKİB) President Hikmet Tanrıverdi called for the reduction of social security premiums, income tax and unemployment insurance in order to create new employment. He added that this was especially needed in the textile sector, calling for a 50 percent decrease in income tax and social security premiums.

Association of Turkish Furniture Manufacturers (MOSDER) Chairman Nazif Türkoğlu stressed the need for investments in lowering unemployment and especially highlighted the role of regional stimulus plans in achieving this. He added that as companies invested in cost-reducing technologies, employment decreased. To solve this, he said, further investments are necessary to employ those laid off. Mustafa Boydak, president of the Kayseri Chamber of Industry, stated that if taxes on minimum-wage workers were decreased by as little as 5 percent, this would greatly help the employment situation. He also recommended that the funds used by the government for İŞKUR’s training programs could be used to support firms with the condition that they promise to employ more workers.

Contractors Union of Turkey President Erdal Eren said that his union is looking forward to 2010 and is expecting the government to continue to invest in building public infrastructure. “This will help increase employment in the sector,” Eren said, adding, “For us to take more workers abroad, the government needs to give us some form of support.” He also stated that Turkey has yet to sign social security agreements with many of the countries contractors are involved in, therefore making it a necessity to pay social security premiums to both Turkey and the country they are located in.