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FEATURE STORY

Getting Back to Work in Turkey

January 23, 2014

STORY HIGHLIGHTS
  • A new report explores the status, effects and generation of “good jobs” in Turkey’s current economy.
  • The report looks at a number of facets, including jobs that are productive, employment that is accessible to women, youth, and long term unemployed, and how to improve living standards.
  • The report builds on global and regional knowledge to offer recommendations that are specific to Turkey.

The importance of work - for both an individual and a country as a whole - cannot be overstated. Employment is fundamental to poverty reduction and remains the primary source of income for most people around the world. For many, having a job goes well beyond a paycheck and associated benefits – it is a source of identity and inclusion. Employment is also a cornerstone for both economic and social growth in a country.

Turkey is no different.  With an unemployment rate that is now hovering above 9% and less than half of the women in the country working in the service, industry or agriculture sector, there is plenty of room to strengthen policy efforts. Indeed, programs and initiatives with considerable fiscal effort are currently underway in Turkey that are aimed at stimulating growth  – working to increase employment and improve the quality of jobs available to all people.

In order to ensure the effectiveness of these efforts, however, the fundamentals of the country’s economy need to be strengthened to enable higher growth and employment. A new World Bank report highlights this effort and provides concrete analysis and advice on strategic ways to build on ongoing economic progress in the country.   

“This new World Bank report explores if the jobs created in Turkey are indeed of higher productivity and are accessible to women,  men, youth and older workers alike,” says Rebekka Grun, lead author of the report. 

“The Bank continues to support policymakers in Turkey to sustain the observed positive trends of more jobs being created in more productive firms, and more educated women and youth having greater access to quality formal jobs. Policies that can help include continuous improvements in the business environment  and a labor market policy that better balances the protection of workers and the incentives for job creation, such as introducing more contractual options for employers to hire according to business needs, and easing the burden of severance on both employers and employees ,” concludes Grun.

Building on recent global and regional reports - such as the World Development Report on Jobs and the Europe and Central Asia flagship report Back to Work: Growing with Jobs in Europe and Central Asia - the World Bank’s most recent report for Turkey provides analyses and recommendations that are specific to the situation in the country.

The regional report Back to Work: Growing with Jobs in Europe and Central Asia report puts Turkey among the group of advanced reformers experiencing better employment performance and more promising prospects, together with countries like Poland and other New Members of the European Union. According to the report, Turkey needs to continue its reform momentum in order to translate its entrepreneurship potential into successful creation of more high-growth companies – or “gazelles” as they are often referred to as. While these “gazelles” often represent only about 10 to 15 percent of all firms and tend to be young, they nonetheless account for about two-thirds of new jobs created in the Europe and Central Asia region.  

In a nutshell, the new World Bank report conveys four hopeful messages for Turkey:

(1) The post-crisis period of strong economic growth in Turkey led to significant employment growth. Given that Turkey generated nearly as many jobs as the US between 2009 and 2012 - at only a quarter of the size - one can cautiously speak about a ‘jobs miracle’ in Turkey.

- many of the newly created jobs have been of better quality: employment growth mainly took place in the services and formal sectors and

- the majority of net employment generation affected both men and women. However, many middle aged and older females have re-entered the informal agricultural sector

(2) Labor reallocation in Turkey appears to be growth-enhancing

- Movement from agriculture to non-agriculture has contributed to overall productivity

- Movements of labor within the non-agricultural sector have been generally growth-enhancing

- There is suggestive evidence of labor reallocation in agriculture towards more productive region

(3) Labor income was the biggest contributor to total household income and growth in labor income contributed to higher living standards among low-income households

(4) Policies supporting the promising developments include,

- for individuals, to sustain a growing inclusion of women (i) expansion of childcare provision, especially in urban centers; and (ii) expansion of services for elderly care, and to sustain a better inclusion of youth and the vulnerable: (iii) improved opportunities of skills development, from more access to pre-school and quality basic education to post-secondary education and training linked to employer needs and (iv) smarter activation policies and social benefits to support access to jobs and the incentives for formal work, and

- for firms (v) reforms to improve competition, business registration, bankruptcy laws, prudent access to finance, taxation, and infrastructure, and innovation, to encourage the creation of more new businesses that can succeed or fail fast and at low cost; (ii) combating informality as for example with the related Government Action Plan, and (iii) the expansion of more flexible contracting and reform of severance pay, as discussed in the 10th Development Plan.