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FEATURE STORY

Turkey: Fostering Jobs, New Business

April 3, 2006


TARSUS, Turkey – Ali Gulbakar’s family-owned clothes shop went bankrupt after the 1991 Gulf War.

After that, Gulbakar, 33, open-faced and energetic, worked at a number of textile factories in Tarsus, a city wedged between the Taurus Mountains and the Mediterranean Sea. Those factories went broke too.

Now, he is at it again: selecting designs, handling cloth and exporting his brand of ready-to-wear fashion to Europe, Russia and the Middle East.

Gulbakar’s professional rebound mostly reflects hard work and perseverance. It is also a credit to a program launched in Tarsus three years ago to provide targeted assistance to small new businesses. The so-called “business incubator”, set up in an abandoned cotton-seed oil factory, gave Gulbakar a free roof, business advice and access to cheap credits – crucial assistance, especially during a firm’s shaky first years.

As of October 2005, the sprawling compound housed 47 small businesses, employing between 250 and 400 workers, many of them laid-off from state-run factories that were closed or privatized in the economic shake-up of the last decade.

Cushioning the impact of privatizations and reforms

There are now six such incubators in Turkey. Five of them were conceived under a World Bank-financed project that seeks to cushion the impact of unemployment caused by large-scale privatizations and economic reforms.

Besides financing job-loss compensation, the Privatization Social Support Project, supported by a $250 million World Bank loan, has helped laid-off workers launch new businesses or find new jobs. (A second $465 million loan with similar objectives is under way.)

Gulbakar, whose business has been turning a profit for the last six months and now employs 35 people, says he couldn’t have made it without the incubator’s help.

“The biggest textile factory in the country shut down here just a few years ago,” he says emphatically. But he sees a different future for himself and his employees. He’s hoping to build brand recognition to increase his profit and escape the fate of cheap, counterfeit clothing manufacturers that have been priced out of the market by Asian competition.

Helping small new businesses survive their first years

Next door, Tankut Urun, 40, has been trying to revive a line of cologne and cosmetics launched once-upon-a-time by his father. Wearing a chemist’s white coat and a wide grin, he says the training provided by the incubator is like a school of business administration. “Thanks to this incubator, I have wider horizons,” he adds. “I plan to go worldwide…”

Other tenants of the Tarsus incubator are busy making garden ornaments, TV furniture, specialized machinery – whatever has a chance of selling.

By contrast, in nearby Adana, a city of 3 million people stretched across a plain once famous for its cotton fields, the World Bank has adopted a more focused approach. The Turkish government and local businessmen are hoping the seeds planted at Adana's new high-tech incubator will bloom into a full-blown Turkish Silicon Valley.

A Turkish Silicon Valley

The incubator, inaugurated in February 2005, is set up in a converted multi-story garage donated by the Adana municipality.

“When I need an electronic card made or software developed, I can just walk across the hall and explain what I want,” says Hasan Ercan, a 21-year-old medical engineer who sells cosmetic and medical devices that use lasers, intense pulsed light and digital gadgets of his invention.

Tenants, who benefit from the building’s synergies and free rent, also have access to precious contacts and advice provided by the Adana business association. A representative from Microsoft was a recent guest speaker. Being part of the Adana incubator gives new businesses more credibility, says Ercan: “People look at you differently. They trust you, they think you’re safe.”

Twenty-three out of 34 firms are involved in software development, attracting youthful talent. Among those drawn to the incubator are graduates from Cukurova University in Adana, one of the country’s top institutions of higher education. Many of them seem intent on achieving quick financial success by producing high value-added goods.

The bulk of the Privatization Social Support Project, however, helps people with lower technical skills and lesser prospects. As of June 2005, 30,741 unemployed and laid-off workers had received job insertion training, exceeding the World Bank's project target.

From odd jobs to secure employment

For Mustafa Kayar, 26, on-the-job training financed by ISKUR, the national employment agency, has meant a dramatic change in his personal circumstances.

A graduate of a mediocre vocational high school, Kayar had no steady job between 1997 and 2003. Although he knew a little about engines from his school days, the theoretical training did not prepare him for real-life technical work. So Kayar drifted between odd jobs, earning less than the minimum wage waiting on tables. As a result, he never had “the courage to get engaged,” he says, or move out of his parents’ home.

His fortune improved when a friend told him about a training scheme sponsored by the national employment agency. The agency placed 90 young men at TEMSA, a bus factory on the outskirts of Adana that needed additional skilled labor to produce coaches for its growing export market. Kayar started his free training in December 2003.

After the training program was over, the factory retained 87 of 90 trainees. TEMSA was so pleased with the outcome that it embraced and expanded on-the-job training as a way of overcoming the deficiencies of traditional vocational schools.

The experience has also been positive for ISKUR, the national employment agency. “There is no general unemployment insurance in Turkey so people usually don’t bother to register with ISKUR,” says Ibrahim Akcayoglu, the project’s task-team leader at the World Bank. But training programs are finally giving unemployed people an incentive to register with the agency. “We want to encourage people to be part of the formal economy,” he says.

As for Kayar? He is now happily married. “It’s only after being hired by TEMSA that I was able to change my life," he says.

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This progress was made possible thanks to the Privatization Social Support Project (2000-2005), supported by a $250 million World Bank loan. Read also about the World Bank's $465 million follow-up project (2005-2009).

Initially published in December 2005


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