Ankara mulls ‘flexible’ employment schemes

Ankara mulls ‘flexible’ employment schemes

Ankara mulls ‘flexible’ employment schemes

As part of the new two-year economic program unveiled on Sept. 29, the Turkish government is considering putting into play comprehensive changes in employment schemes.

The unemployment rate is projected to reach 13.8 percent this year and 12.9 percent next year, according to the program announced by Treasury and Finance Minister Berat Albayrak.

He said the jobless rate will gradually drop to 10.9 percent by 2023.

“The government will implement policies for economic recovery during the post-pandemic period to support the labor market,” he added.

New schemes and allowances to encourage young and inexperienced laborers to join the labor force will include new short-term working schemes, according to state-run Anadolu Agency.

The new measures, titled the Employment Shield Package, will bring in fixed term contracts into the legal framework in a bid to support the growing gig economy.

Currently, employers can only recruit workers on permanent contracts and are obliged to contribute to all social security premiums including pension accounts and healthcare insurances. With the new legal changes, employers will be able to hire people for specific days or weeks only covering the healthcare insurance premiums.

Employees over 50 will be granted government supports if they opt for short-term working schemes to give room for younger laborers.

Unemployment in Turkey rose to 13.4 percent in June, up 0.4 percentage points from the same month last year, the Turkish Statistical Institute (TÜİK) said on Sept. 10.

TÜİK data showed the employment rate stood at 42.4 percent, falling significantly by 4 percentage points on an annual basis. The labor force participation rate also went down by 4.3 percentage points year on year, falling to 49 percent in June.

The youth unemployment rate, including people in the age group of 15-24, was 16.1 percent with an increase of 1.3 percentage points on a yearly basis.

Under the short-term employment allowance scheme, the unemployment fund pays 60 percent of the staff salaries of the employees when a business cuts work hours.

To become eligible for the short-time working scheme, an employee should have worked for at least 60 days in that firm and have paid 450 days of premiums for the last three years.

Overall, nearly four million workers have received short-term working allowances since the eligibility criteria were widened in April. The total amount paid as part of the scheme in the last five months reached 19 billion Turkish Liras ($2.5 billion).

As of Aug. 31, the fund’s total volume fell to 112 billion liras ($14.9 billion), whereas it was around 131 billion liras ($19 billion) at the end of 2019.

Business circle welcomes new program

Nail Olpak, chairman of the Foreign Economic Relations Board (DEİK), said the new economic program has put forward a new roadmap that instills confidence in the Turkish business world and private sector.

He argued that the new program offers an innovative, high value-added, people-oriented, and export-based strong development plan.

“In the last two years, we witnessed the achievement of the targets in the programs announced in general despite the difficult periods,” he added.

İsmail Gülle, the head of the Turkish Exporters’ Assembly (TİM), said the newly unveiled program emphasize the three main objectives: Keeping the labor market alive, providing households and businesses with the necessary liquidity, and keeping supply chains alive by guaranteeing the continuity of the activities of key sectors.

“It is a reasonable scenario for the economic growth rate to be slightly positive in 2020, as envisaged in the new economic program,” said Abdurrahman Kaan, the head of Turkey’s Independent Industrialists’ and Businessmen’s Association (MÜSİAD).

Thus, the economy will not fall too far to the 2021 economic growth target of 5.8 percent due to the base effect, he added.

“However, in order for economic growth to be at the level of 5 percent in the ongoing period, both economic efficiency and productivity should increase,” he concluded.