Joblessness rate drops to record lowest point

Joblessness rate drops to record lowest point

ISTANBUL - Anatolia News Agency
Joblessness rate drops to record lowest point

The decrease in Turkey’s unemployment stems from an early start to the harvest. AA photo

The unemployment rate in Turkey dropped to 8.2 percent in May, compared with 9 percent the previous month and 9.4 percent in May 2011, according to official data released yesterday.

The figure is the lowest in the last 10 years, said Finance Minister Mehmet Şimşek.

The decrease in the labor market, a significant improvement despite a slowing economy, was mainly due to seasonal effects in the services sector and an early start to the harvest. But the seasonally adjusted figure remained unchanged at 9 percent, which is still the lowest level since the initiation of the new employment indexes in 2005.

“We observed that the improvement in the labor market gained some momentum in May compared to April, despite the slowing economy. In fact, detailed employment data confirm the state of economic activity. Employment in industry remained almost unchanged, whereas with the start of the tourism and construction seasons employment in those sectors increased substantially,” said Özgür Altuğ, chief economist at BGC Partners.

Seyfettin Gürsel, an economist who heads Istanbul-based think tank Betam, emphasized “a significant seasonal effect on the [unemployment] data.”

“Employment naturally increases toward the summer months. We have to take a look at the seasonally adjusted data, which is flat,” Gürsel told Anatolia news agency yesterday.

But even excluding seasonal effects, the Turkish economy continues to generate employment, Gürsel said, adding that construction and services generated the most employment. The adverse effects of the slowdown in the economy will be observed later, he said.

Economy generates jobs

There are nearly 25.3 million employed and 2.7 million unemployed people in Turkey, Turkish Statistical Institute (TÜİK) data show. The workforce participation rate remained unchanged at 50.5 percent in May compared with May 2011. Some 25.2 percent of the workforce is employed in the agricultural sector, 18.8 percent in industry, 7.2 percent in construction and 48 percent in services.
The agricultural sector alone accounted for more than half of the increase in employment, Turkish Chambers of Agriculture Union (TZOB) President Şemsi Bayraktar said yesterday in a written statement.

“The total increase in employment was 652,000 in May, 54 percent of which came from agriculture. On a monthly basis, employment increased by 352,000 in agriculture, 135,000 in services, and 197,000 in construction, while the figure was down 32,000 in industries,” Bayraktar said.

The level of unemployment will fall further as an incentive scheme attracts more direct investment to Turkey, Economy Minister Çağlayan said yesterday. The non-farm and youth unemployment rates are at their lowest levels ever, he added.

“The 8.25 percent unemployment rate is 2.2 points below the target stated in the medium-term program for 2012,” Çağlayan said.

Non-farm unemployment dropped to 10.4 percent from 12 percent, and youth employment dropped 1.6 points to 15.9 percent year-on-year in May, TÜİK said.

Despite significant improvement, the unemployment rate is still high structurally, but unemployment rates are better than expected despite the economy slowing, ING Bank Chief Economist Şengül Dağdeviren said. The share of the services sector in employment in Turkey is 51 percent, which is lower than the 56 percent Poland enjoys or 68 percent in the European Union overall, according to World Bank data, she said.

Structural unemployment

“The share of industry in employment dropped 0.7 point to 18.8 percent. It would be preferable to see an increase in the share of services in total employment coming from agriculture, not industry,” she said. “Even though the rise in employment since 2009 has been strong and positive, the structural unemployment rate in Turkey is still high. So the effects of medium- and long-term reforms on employment are important.”