A surprising upgrade

Standard & Poor's on Wednesday raised Turkey's sovereign credit rating from BB to BB+. Just few months ago the same rating agency had refused to follow its competitor Fitch, which had upgraded Turkey to investment level, noting the ongoing rebalancing process at the time. “Rebalancing,” according to economists means a decreasing current account deficit while net exports (higher increase of exports than imports) are contributing positively to economic growth. Indeed, this was the case in 2012. Although the growth rate declined to under 3 percent , it remained positive, while the share of the current account deficit in gross domestic product (GDP) shrank from a dangerous level of 10 percent to just below 6 percent according to the most recent estimates. Fitch had considered this evolution quite enough for upgrading Turkey, while S&P preferred to announce a “wait and see” attitude, arguing that the future evolution of the current account deficit is not yet clear.
Now, to justify its upgrade S&P presents two arguments: rebalancing the economy and progress in the settlement of the decades-old Kurdish issue. Are these arguments convincing? I do not think so. Let's start with the first one. S&P says that “the Turkish economy appears to be slowly rebalancing without undermining its relatively strong fiscal performance.” I agree with the “strong fiscal performance,” which is not indeed a novelty, but not with the “slowly rebalancing.” In fact, the rebalancing process, as defined above, seems to be coming to an end, if it is not already the case. Since it became clear that the growth rate decreased well below 4 percent -- the rate forecast in the Medium-term Economic Program (OVP) because of stagnating domestic demand, the central bank decided to give a push to it, easing its overall monetary policy. So, a majority of economists, of whom I am a part, expect a revival in domestic demand, but rather a weak export performance given weak global demand, particularly in the European market, which is still the main destination for Turkish goods. In this context a reversal in the rebalancing process would not be a surprise. The growth rate will probably rise, but we will witness a smoothly increasing current account deficit. I do not think that its financing will be problematic, at least this year, but do not forget that private sector debt denominated in hard currencies are dangerously increasing. Given the high risk of a reversal in the rebalancing, I believe this was not the right time to upgrade Turkey's rating, particularly for a rating agency that had adopted a “wait and see” attitude. So, what about the peace process, as we call it? If the so-called “low intensity war” is terminated and Turkish democracy is improved along with it, as is naturally expected, the Turkish economy will be positively affected for sure. However, as I argued in my column of last Saturday (“Peace dividends”) direct effects should not be exaggerated. Particularly, the impact of peace dividends would not be very helpful for the current account deficit. I believe the indirect impact would probably be much more important than the direct one: Once the bloody Kurdish issue is transformed into a peaceful democratic issue, the government will be able to address with more courage and with more energy the difficult structural economic problems Turkey is facing. This said, I think, S&P acted rather like an eager beaver. We do no know yet when the peace process will be completed, or even if it will ever be completed. So, what did S&P's too cautious management have in mind by making such a decision? It might be that they wanted to send a warm message to the Turkish government -- recalling the harsh criticism expressed by several Turkish ministers when S&P had refused to follow Fitch in upgrading Turkey's rating. The reaction of Zafer Çağlayan, minister of economy, to S&P's upgrade has to be underlined in particular. He said: “Israel offered an apology, as you know. I also see this [upgrade] as an apology from Standard & Poor's to Turkey. This is a belated apology.” The apology may be beneficial, but it is not sufficient to impress investors. S&P's upgrade had, for example very limited impact on Treasury bond interest rates. The benchmark two-year bond yield fell to 6.38 percent from 6.41 percent. Now the question is, how S&P will behave if the current account deficit starts to increase and the peace process becomes a long process?

An outcome fraught with consequences

I will talk neither about the peace process with the Kurdistan Workers' Party (PKK) nor about Benjamin Netanyahu's apology for the Mavi Marmara disaster, but rather on the last-minute solution to the Greek Cypriot economic crisis. The solution can be summarized in one sentence: Wealthy depositors at the Bank of Cyprus and those of Laiki Bank will pay the bill. A levy of 40 percent on deposits over 100,000 euros will be taken in the case of the Bank of Cyprus, while the second will simply shut down. Laiki Bank depositors will have to be content with what will be left to them after the liquidation of the bank. It is time now to discuss the multidimensional consequences of the so-called “Cyprus solution.”
Years ago, the Greek Cyprus government decided to transform the island into a “tax haven” with very weak regulations pertaining to black money inflow. Their success was amazing. The Greek Cypriot banking sector was flooded with billions of dollars from tax evaders and Russian oligarch's amounting to almost seven times the amount of Greek Cyprus's gross domestic product (GDP). Then came the Greek meltdown. The heavy haircut imposed on the Greek public debt held by banks hurt Greek Cyprus dramatically as its banks had invested extensively in the “motherland” debt. So some of the island's banks came to the verge of failure, a situation very similar to what happened in Ireland. But given the size of the bill, it was impossible to apply the Irish rescue strategy to Cyprus -- i.e., the transformation of the debts in collapsed private banks into public debt through the nationalization of the banks -- simply because the public debt of Greek Cyprus would have reached several times its GDP, making the debt burden absolutely unbearable. So the Troika decided to contribute only 10 billion euros out of the 16 billion euros demanded to the rescue plan, the remaining 6 billion euros being left to the responsibility of the Greek Cypriot government. The first attempt to charge all depositors backfired, and finally the decision to charge only the wealthy depositors, and much more heavily than before, was taken. Russian depositors had reacted vehemently to the first plan in which the levy on deposits of more than 100,000 euros was limited to 10 percent. Now the contribution from Russian depositors is set to be higher. A Russian commentator identified the initial 10 percent levy as “Bolshevik methods,” so I cannot imagine now the epithets that will be chosen by the furious Russians. This is the end of the tax haven. Greek Cyprus has already instituted capital controls aiming to limit the amount of money exiting its finance markets. From now on, we will witness a shrinking banking sector on “Treasure Island”; the treasure, it appears, was virtual rather than real. Indeed, the bill of the failure is not limited to the banking sector and to its depositors. The 10 billon euro loan added to the existing public debt, more than 80 percent of GDP, will make Greek Cyprus the second most indebted eurozone member after Greece. Greek Cypriots will be obliged to “tighten their belts” for years. This aspect of the “solution” has not yet been discussed. But, as the most urgent problem, the rescue of the banking system has been solved, and Greek Cypriots will soon be facing the unpleasant measures of the standard rescue programs. I am not sure that Nicos Anastasiades' fragile coalition will be able to survive the pressure from the street. What will happen to the “Cyprus negotiations” – the unification of the Greek and Turkish-controlled parts of the island -- in this new context? This is a difficult question. I think the negotiations will take time to resume since Greek Cypriot President Anastasiades will be very busy and will likely keep a distance from such issues. Nevertheless, in the medium term a conjunction of various factors can facilitate the solution, which has been unobtainable for half a century. The EU bailout gave Brussels efficient leverage over the Greek side of the island. See my column “Something is being plotted over Cyprus” published on March 11. It will be forced to accept a negotiated solution. Greeks Cypriots now count on a “new treasure,” the rich natural gas reserves recently discovered. The only feasible way to exploit them is through cooperation with Turkey. The recent reconciliation between Turkey and Israel gives new opportunities in this area. The dream of pipelines transporting the gas of the east Mediterranean to the EU through Turkey as well as the NATO membership of a unified Cyprus can become a reality in this new context. I think and I hope that Turkey will cooperate if Greek Cyprus agrees to give a fair share of the future gas revenues to Turkish Cyprus. Last but not least, the young Greek Cypriot generation can get rid of their arrogance vis-à-vis the “poor” Turkish Cypriots, considered a burden, in the event of unification. We can hope that they will start to see that a solution to the division of the island will help to prevent potential pain they could suffer in the near future.

Peace dividends

The letter written by imprisoned Kurdistan Workers' Party (PKK) leader Abdullah Öcalan, read during the Nevruz festivities in Diyarbakır, opened a new era for Turkey as well as for the Middle East, as Öcalan stated it. It is the truth that we are only at the beginning of the peace process and that many difficulties wait ahead. We should be ready for ups and downs, but I believe that the process is irreversible. This paper is full of political commentary by its writers about this historic event. As an economist, I would like rather to share with you my views about “peace dividends” that may be expected.

Kurdish woman celebrating Newroz A “peace dividend” is defined in economics literature as the economic benefit resulting from a transition from war to peace. In the case of Turkey it is the question of a transition from a “low-intensity regional war” to peace. Yesterday the Turkish press reflected the euphoria expressed by the business community. “Farewell to arms, hello to investments” and “Peace will allow the region to take off” are some examples of statements made by the top Turkish businessmen. Obviously, the winds of optimism are blowing in the economic sphere as strong as they are in politics. Peace will certainly have its dividends. But I am afraid that we risk being disappointed, since expectations seem to be too high. Let's start with a short list of direct peace dividends limited to the economy that could be reasonably expected if the armed clashes with the PKK are terminated definitively. I think there are two main dividends: First, higher economic growth, particularly in the East and Southeast, the least developed regions. Second, a decrease in military expenditures that would allow an increase of public expenditures in productive activities would be possible. There are different channels boosting economic growth, but the most important is the investment-employment channel. Could we expect an investment boom in the region if armed clashes are to end? I do not think so. An investment boom could have been considered a possible result if it was proved that investments would have been constrained due to an adverse business climate in the East and Southeast. Now, there is no evidence that is the case. According to research conducted last April on regional labor markets by Bahçeşehir University's Center for Economic and Social Research (BETAM), from 2005 to 2011 non-agricultural employment rose by 20 percent across Turkey. The rates of increase in the East and Southeast regions were much higher than this national average, with 44 percent in Mardin, Batman, Şırnak and Siirt; 38 percent in Şanlıurfa and Diyarbakır; 72 percent in Van, Muş, Bitlis and Hakkari; 48 percent in Malatya, Elazığ, Bingöl and Tunceli; and 26 percent in Ağrı, Kars, Iğdır and Ardahan. The strong improvement in non-agricultural employment does not mean that the unemployment problem has been alleviated in these regions. In some provinces, like Ağrı and Van, unemployment rose despite employment increases due to strong pressure from a labor force growing as a result of migration from villages to cities. In others areas, like Şanlıurfa and Diyarbakır, unemployment decreased, contrary to widely held beliefs. There will still be a positive impact of post-conflict investments, but we should moderate our expectations. The astonishing boom in exports to the Middle East, particularly to northern Iraq, pushed investments and employment in some regions, while at the same time, the ongoing “low-intensity war” has not prevented them. I believe that as much as peace with the PKK, the opening of the Armenian border to trade could contribute to the economic development of Turkish provinces nearby where unemployment is quite high. That said, the two major peace dividends regarding economic growth would be, I believe, the revival of cattle and sheep breeding and the full integration of northern Iraq, with its immense oil and natural gas potential, into the Turkish economy. As for military expenditures, the lack of figures, jealously kept confidential, prevent us from making quantitative estimations. Nevertheless, the number of conscripts will certainly drop and savings on ammunition is a possibility. The share of the defense budget in gross domestic product (GDP) is about 4 percent (probably 5 percent if confidential expenditures were added). Even 1 percent saving will free up $7-8 billion. This is quite a lot of money that can be used, for example, for the education and social integration of previous PKK militants.

Kadın istihdamında patlama

Cuma günü yayınlanan Aralık dönemi işgücü piyasası istatistikleri işsizlikte dikkat çekici artış gerçekleştiğini ortaya koydu. Doğal olarak medya bu sonucu öne çıkardı. Aslında bu sürpriz bir gelişme sayılmaz. Mevsim etkisinden arındırılmış işsizlik oranı bir süredir artış eğiliminde. Oran geçen Haziran döneminde yüzde 8.9 ile dip noktasını görmüştü. TÜİK’in tahminlerine göre işsizlik oranı ılımlı ama ısrarlı artışlar sonucunda Aralık döneminde yüzde 9,6’ya yükseldi.

Kadın istihdamı hizmetlerde hızla artıyor

            Kime sorsanız büyümede yaşanan sert düşüşün işsizliği artırıcı etki yapacağını söyler. Düşük büyüme düşük istihdam artışı demektir. Türkiye gibi işgücünün sürekli arttığı bir ülkede, düşük istihdam artışının işsizlikte artışa neden olması doğaldır. Ama burası Türkiye. Her zaman şaşırtıcı gelişmelere hazırlıklı olmak gerekiyor. İşsizlikteki  artışın ardında iki şaşırtıcı gelişme söz konusu: Birincisi, düşen büyümeye rağmen istihdamın hızla artmaya devam etmesi. Dolayısıyla işsizlikte artış, istihdam yetersiz kaldığından değil, işgücü artışının istihdam artışından daha hızlı seyretmesinden kaynaklandı.  İkincisi şaşırtıcı gelişme ise, kadınların daha önce hiç gözlemlenmediği ölçüde çalışma yaşamına katılarak kadın istihdamını artırmaları.

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            Bu iki şaşırtıcı gelişmeyi rakamlarla özetleyelim. Büyümede sert düşüşün ortaya çıktığı 2012’nin ikinci yarısında işgücü yüzde 3,2 oranında arttı. İstihdam artışı ise yüzde 2,5 oldu. Altı aylık artış oranını yıllık artışa çevirirsek yüzde 5 eder. Oysa 2012’nin ikinci yarısında yıllık büyüme oranının yüzde 3’ün altında kalacağı kesin görünüyor. Düşük büyümenin istihdama gecikme ile yansıması doğal ama firmaların çalışan sayılarını üretim düzeylerine uyarlamaları için bir kaç aydan fazla bekleyeceklerini sanmıyorum. Bu artışta kamunun önemli paya sahip olduğunu tahmin ediyorum. Kuşkusuz başka etkenler de rol oynamış olabilir. Araştırmak gerekiyor.

            İstihdamda beklenmedik artışın çarpıcı yönü, kadınların bu artışta büyük rol oynaması. TÜİK’in yıllık rakamları durumu özetliyor. Aralık 2011’den Aralık 2012’ye istihdam 1 milyon 88 bin kişi arttı. Bu artışın yarısı, tam olarak 539 bini kadın istihdamındaki artıştan kaynaklandı. Tarımda kadın istihdam artışı 48 binden ibaret. Artışın yüzde 90’ı tarım dışı sektörlerde, özelikle de hizmetlerde gerçekleşti. Artışın yüzde 70’i de ücretli istihdamdan oluşuyor. Kadın istihdam artışında yüksek öğrenim mezunlarının ağırlığı dikkat çekici. Bu grupta işgücüne katılım oranı (çalışanların ve iş arayanların kadın çalışabilir nüfusuna oranı) bir yıl içinde yüzde 70,4’den yüzde 74’e yükseldi. Daha önce görülmemiş bu sıçrama başlı başına manşetlik bir haber. Bu arada kadın işsizlik oranının da yüzde 12,2’den 15,9’a çıkarak kayda değer bir artış kaydettiği not edilmeli.

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            Kadın işgücünde ve istihdamında ortaya çıkan hızlanmayı  bir süredir Betam’da izliyorduk.  Cuma günü yayınlanan İşgücü Piyasası Görünüm notuna bir kutu ekleyerek, tabir caizse, kadınları mercek altına aldık. Aşağıdaki iki grafik çalışan kadın cephesindeki gelişmeleri az da olsa aydınlatıyor. 2011 yılından itibaren mevsim etkisinden arındırılmış tarım dışı kadın istihdamında artış hızlanıyor ve belirgin biçimde işgücü artışının üzerine çıkıyor. Doğal olarak tarım dışı kadın işsizlik oranı da hızla düşüyor (işsizlik grafiği için betam notuna bakılabilir). Buna karşılık son dönemde kadın işgücünde de hızlanma dikkat çekiyor. Bu çarpıcı gelişmenin bir diğer yönü de eğitim düzeyleri itibarıyla eğilimlerin farklılaşması. Yukarıda belirttiğim gibi en yüksek istihdam artışı yüksek öğrenim gören kadınlarda. Hemen ardından ilk öğretim ve daha düşük eğitime sahip kadınlar geliyor. Bu iki grupta temayüz eden çalışma şevkinin farklı motivasyonlardan kaynaklandığını tahmin ediyorum. Lise mezunları arısında ise çalışma şevkinde belirgin bir canlanma yok.       

Are the brakes burning?

Zafer Çağlayan, Minister of Economy The expected reaction from the “growth lobby” to an increasing trend in unemployment was not delayed. Economy Minister Zafer Çağlayan, soon after the publication of December employment figures last Friday, reminded us how the rise in unemployment is unacceptable, for him and probably for the government as well. In his statement he once again used his favorite metaphor of burning brakes: “The brakes have begun to smell. Four or five months ago, I had warned to not push too much on the brakes. Unfortunately, the brakes have finally started to burn. But we have not been demoralized by this. I still hope to see better figures.”
Mr. Çağlayan then expressed his approach to economic policies: “From now on, we must step on the accelerator. … Each year we must grow by 6 percent. The way to reach this target is through expansion, not contraction. There is no need to be cautious on interest rates. They should be lowered.” In my column of Feb. 11 (“Worries on economic growth”), I wrote: “… I think the available information summarized above is enough to allow me to express some reflections on an important consequence of low growth. Further loosening monetary policy would risk jeopardizing the 5 percent inflation target. If the Central Bank maintains its actual stance, the already existing signals of an upturn in unemployment would become more perceptible. This will increase, for sure, the political pressures on the central bank's management.” I was not mistaken. Economic policies have arrived at a crossroad. The soft landing that was desired did not occur. The landing was rather hard, as the 2012 growth rate is expected to certainly fall below 3 percent. That said, Mr. Çağlayan is mistaken in believing that low growth is responsible for increasing unemployment. As I explained in my column on Saturday, despite the low growth rate, Turkish corporations and the state created lots of jobs last year, to the degree that the growth rate of employment exceeded that of gross domestic product (GDP). Unemployment is rising not because of insufficient employment but because of a strong growth of the labor force, particularly in the numbers of women. I believe these anomalies cannot maintain themselves, at least if economic theory and common sense prevail. I am afraid that Mr. Çağlayan, who hopes to see better figures in the coming months, risks being disappointed. If GDP growth maintains its pace at around 3 percent, rising employment will unavoidably decelerate. Even in the case of a deceleration in the growth of the labor force, I believe we should still expect rising unemployment. Unemployment is indeed the main threat to economic stability. I agree with Mr. Çağlayan that growth should be accelerated. The 6 percent target announced by the economy minister is out of range, but 4 percent is achievable. This could also be just enough to calm the worries regarding rising unemployment. But how? This is the critical question economists are asking themselves nowadays. The answers vary. The central bank and Treasury are confident that the 4 percent growth will come partly from external demand and partly from domestic demand. Let me remind you that last year domestic demand did not contribute at all to growth. However, the central bank and some economists do not think that radical changes in economic policies are needed. Some others, like Mr. Çağlayan, defend the argument that further loosening in monetary policy and the depreciation of the Turkish lira are necessary. At the moment, no one defends the loosening of fiscal discipline; Mehmet Şimşek, the minister of finance, announced last Friday that budget performance for the first two months is better than that of last year. This is good news. But if the state of the budget is revealed to be insufficient to revive domestic demand and/or exports fall further behind imports, what will happen to the moderately expansionist monetary policy and to the moderately tight fiscal policy? Personally, I think that there is no room for further lowering interest rates. The real interest rate has already come down to as low 1 percent, and the central bank is neither able nor willing to lower it. A limited depreciation of the Turkish lira will certainly aid growth, but the way to realize that process is not evident in the slightest. Thus it remains in the hands of fiscal policy. Let's hope that growth will resume in the coming months, just enough to stop the rise of unemployment and just enough to limit the unavoidable increase of the current account deficit.

Unemployment is still on a rising trend

December labor market statistics reveal a moderate surge in unemployment. This should not be a surprise for the readers of this column. For months I have been trying to explain that decreasing economic growth would inevitably have an adverse impact on employment, leading to higher unemployment, sooner or later.  In fact, an increasing tendency in unemployment has been perceptible since autumn, and the December figures confirm it. However, the increase in unemployment does not originate from weak job creation as would be expected, but rather from an astonishingly strong rise in the labor force.
The latest Turkish Statistics Institute (TurkStat) seasonally adjusted figures show that the unemployment rate reached its minimum level in June 2012 at 8.9 percent. Since then we have been observing a moderate but persistent rise in the unemployment rate that finally reached 9.6 percent last December. The Bahçeşehir University Center for Economic and Social Research's (BETAM) estimates regarding the evolution of the non-agricultural unemployment rate is rather similar. The seasonally adjusted figures show that the minimum level in the unemployment rate was reached in January 2012 at 11.2 percent, and it rose to 11.8 percent in December. There are two striking features of the recent developments in the Turkish labor market. The first one is the very high increase in the labor force, particularly the increase among woman. The second is the continuing rise in employment despite low economic growth. From June to December, the labor force increased by 3.2 percent and employment by 2.5 percent, according to TurkStat's seasonally adjusted estimations. For a six months period, those increase rates are too high, and they have never been seen before. In particular, we must note the fact that the yearly growth rate in employment is reaching 5 percent for the last six months, a period in which the Turkish economy was experiencing a rather hard landing. The role played by women in these developments has to be particularly underlined. From December 2011 to December 2012, total employment rose by 1,088,000 -- half of whom (539,000 precisely) were women. We should note that in this highly surprising increase of female employment, agriculture had a very marginal share as female employment increased only by 48,000 in this sector. On the other hand, two-thirds of the increased employment took place in the service sector. Let me add that wage earners constituted 70 percent of this female employment increase, and the increase has been particularly high among female university graduates; the labor force participation rate among this group strongly increased from 70.4 percent to 74 percent, and the unemployment rate jumped from 12.2 percent to 15.9 percent within a year. To be frank, I do not know how to explain these unprecedented events since we need more information. We will get this additional information when the micro data of the 2012 Household Labor Survey are published in May. That said, I can make some personal guestimates. I think that the strong employment increases despite the low economic growth cannot continue. We know that public institutions, being part of the service sector, accelerated their hiring last year but these hirings cannot be as intense this year as last year, unless the budget deficit surpasses its target. On the other hand, this year we expect higher growth than last year, but there is a large consensus among forecasters that the growth rate will be at best around 4 percent. Now, simple economics say that it is impossible to increase employment more rapidly than gross domestic product (GDP) growth, except maybe over short periods. So, I expect a slow down in the increase of employment in the coming months. If this slowdown occurs and the labor force continues to increase at its actual pace, unemployment will start to increase much more strongly. But I think there will also be a deceleration in the increase in the labor force, particularly among women; unless we can identify the factors behind the unexpected jump in the female labor force participation and prove that these factors are permanent.

İşsizliğin yapısal boyutu

Güvenlik yerine yatırım isteyen Mardinliler

İşsizliği basında çoğunlukla ekonomik büyüme ile ilintili olarak tartışıyoruz. “Büyüme yeterince istihdam yaratıyor mu”, “büyüme düşüyor işsizlik artar mı” türünden sorulara yanıt aramakla meşgulüz. Bu işsizliğin ekonomik faaliyet ile ilgili boyutu. Önemli ama bir de işsizliğin ‘yapısal’ boyutu var. Gelişmiş ülkelerde işsizliğin bu boyutu uzun süredir inceleniyor ver tartışılıyor. Bizde yapısal işsizlik üzerine araştırmalar emekleme döneminde sayılır ama hızla gelişiyorlar. Bu gelişmede TÜİK işgücü istatistiklerini  zenginleştirme çabasının büyük payı var. Yıllık olarak yayınlanan bölgesel ve mesleksel işsizlik verileri Türkiye’de işsizliğin yapısal boyutunun ihmal edilmeyecek kadar önemli olduğunu gösteriyor.

Şaşırtıcı bölgesel farklar

Gecen hafta yayınlanan 2012 yılı Hane Halkı İşgücü istatistikleri işsizliğin bölgesel ve mesleksel boyutlarında yaşanmakta olan vahameti bir kez daha gözler önüne serdi. Bölgesel işsizlik oranları yüzde 21,3 ile 4,4 aranda değişiyor. En yüksek oran Mardin, Batman, Şırnak, Siirt illerinden oluşan bölgede. En düşük oran ise Manisa, Afyon, Kütahya, Uşak illerinden oluşan bölgede. Mardin bölgesinde işsizlik oranının zirve yapmasını “teröre” bağlayarak normal karşılayabilirsiniz. Ama yanılırsınız. Terör yüksek işsizliğe neden olsaydı, Güneydoğu’nun diğer bölgelerinde de yüksek olması gerekirdi. Oysa böyle değil. Şanlıurfa-Diyarbakır’da yüzde 6,9 ile Türkiye ortalamasının (yüzde 9.2) çok altında. Gerçi işgücüne katılım oranı bu bölgede Mardin bölgesine kayılsa daha düşük (yüzde 28’e 35) ama işsizlik oranındaki devasa fark terörün sanıldığı gibi önemli bir neden olmadığını gösteriyor.

İkinci en yüksek işsizlik oranına sahip bölge yüzde 14,8 ile İzmir. Bu size şaşırtıcı gelmesin. İzmir’de işsizlik hep yüksekti. Ama hemen bitişiğindeki Manisa bölgesinde işsizlik oranı yüzde 4,4’den ibaret. Bu bölgede işsizlik yok sayılır. Keza İzmir’in Kuzey komşusu Balıkesir-Çanakkale bölgesinde de işsizlik çok düşük: Yüzde 5,4. Komşu bölgeler arasında bu kadar büyük işsizlik farkları nasıl oluyor diye sorabilirsiniz? Anlatması hem uzun hem de yeterince araştırmış değiliz.  Ama şunu biliyoruz: Her bölgede, hatta ilde işgücü arzı ve talebi büyük farklılıklar gösterebiliyor. Bu farklılıklara bir de bölgeler arası işgücü hareketliliğinin kimi durumda oldukça düşük kimi durumda ise çok fazla (İzmir’in maruz kaldığı göç baskısında olduğu gibi) olduğu bilgisini eklerseniz durum biraz aydınlanmış olur. Bu manzara Hükümet’e işsizlikle mücadelede bölgesel farklılıkları dikkate almasını ve bölgelere özgün önlemler geliştirmesini söylüyor. Örneğin Hükümet rafa kaldırdığı bölgesel asgari ücret projesini raftan indirmekle işe başlayabilir.

Her beş gazeteciden biri işsiz

Yüksek okul veya üniversite mezunları arasında yüzde 10,1 olan ortalama işsizlik oranı, meslekten mesleğe büyük farklılıklar sergiliyor. En düşük işsizlik oranı yüzde 1 ile Güvenlik hizmetlerinde.  Bu ne demek bilmiyorum. Ardından Sağlık hizmetlileri (yüzde 2,1),  onların ardından da hukukçular (yüzde 3,4) geliyor. Bu mesleklerde talebin güçlü buna karşılık arzın yeterli olmadığı anlaşılıyor. Öte yandan Gazetecilikte işsizlik kırıp geçiriyor: Oran yüzde 22,1. Ardından sanat mezunları geliyor: Yüzde 21. Kimi mesleklerde büyük arz fazlası, kimilerinde ise yüksek talep  olduğu apaçık ortada. YÖK’ün yüksek okul ve üniversite kontenjanlarını acilen gözden geçirmesinde büyük fayda var.

Huge regional disparities in unemployment

Güvenlik değil yatırım isteyen Mardinliler The Turkish Statistics Institute (TurkStat) published labor market statistics on Wednesday for the year 2012. The unemployment rate decreased from 9.8 percent in 2011 to 9.2 percent. However, I must say that these yearly figures do not bring any new information regarding the evolution of unemployment. I try in this column to regularly inform readers on the state of the Turkish labor market using monthly statistics. We know from those that the unemployment rate climbed slightly since last autumn, partly because of a strong increase in the labor force (the number of people seeking work or employed) and partly because of a deceleration in the increase of employment. Next Friday, we will see if this trend is confirmed or not when the labor market statistics for December are published.
The new pieces of information contained in the yearly statistics are twofold: The first point concerns the distribution of unemployment across regions, and the second the distribution of unemployment among degree holders. These statistics are not included in the monthly releases. Let's focus today on regional unemployment, which decreased in 20 of the 26 regions as defined by level two of the EU nomenclature of territorial units for statistics (NUTS 2). In the remaining six regions, unemployment has increased or remained the same. The regional champion in unemployment is the extreme Southeast, including the provinces of Mardin, Batman, Şırnak and Siirt. Unemployment went up in this region from 12.7 percent to 21.3 percent; this rate is already more than double the national average, but the size of the increase is also incredible. The explanation lies in both a 6.8 percent decrease in employment and a 3.1 percent increase in the labor force. Could the cause of these adverse changes be the unfavorable business climate created by the “low-intensity war” ravaging this region? To investigate this possibility, we have to look at other regions in the Southeast. In two out of three of the other regions in this area, including the provinces of Van, Muş, Bitlis, Hakkari, Gaziantep, Adıyaman and Kilis, the unemployment rate has decreased due to an increase in employment that is stronger than the increase of the labor force. In the third region, which encompasses Şanlıurfa and Diyarbakır, unemployment has still decreased, but in an unhealthy way: Employment decreased but less than the labor force decreased. So, the strong increase in unemployment in the region including Mardin cannot be attributed to the conflict in the Southeast because we do not observe the same pattern in other regions of the Southeast. Therefore, the causes must be sought elsewhere. The area with the second-highest unemployment is the İzmir region, which is in the extreme west of Turkey. The unemployment rate in İzmir increased slightly from 14.7 percent to 14.8 percent. This is not surprising because, for a long time, the Aegean city has had high unemployment rates due to strong increases in the labor force caused by much immigration from eastern and southeastern Turkey, and its economy has been unable to produce enough jobs to compensate for this. This is the dark side of regional unemployment in Turkey. There is also a bright side. The unemployment rate is as low as 4.4 percent in the region that includes the provinces of Manisa, Afyon and Uşak. The second-best rate is held by Balıkesir and Çanakkale at 5.4 percent. In these two western regions, unemployment is at its natural level, which means that the vast majority of unemployed people are those in transition from one job to another. It is remarkable to observe in the region that includes Manisa, Afyon and Uşak a decline in unemployment from 4.7 percent to 4.4 percent despite a strong increase (4.5 percent) in the labor force, simply because employment increased even more, by 5 percent. This rapidly industrializing region has come to have the most dynamic, healthy labor market in Turkey. It is quite astonishing to see that its neighbor, İzmir, possesses one of the worst labor markets. The huge regional disparities in unemployment show that labor mobility is actually still relatively weaker in Turkey. So, regional differences in labor market attributes should be taken into consideration when designing policies to combat unemployment. The regional dimension of these policies matters. The decentralization of the setting of the minimum wage across regions is of particular importance. It is quite detrimental that the government has abandoned this idea.

İç savaş, Abraham Lincoln ve siyasal etik

Bugün ekonomi yazısı yazmak pek içimden gelmiyor. Barış sürecinin nefes kesici gelişmeleriyle yatıp kalktığımız şu günlerde gelin son zamanların en iyi filmlerinden biri olan Abraham Lincoln’den söz edelim. Filmi izleyenler sözü nereye getirmek istediğimi tahmin etmişlerdir. İzlemeyenler ise biraz sabredecekler.

Film 1860’larda patlak veren Amerikan iç savaşının son bir kaç ayını kapsıyor. Bu kanlı savaş 600 bin genç insanın canına mal olmuş, köleci Güney uzatmaları oynamakta ama bir türlü pes etmemekte, her iki tarafta da kayıp sayısı her gün artmaktadır. İkinci başkanlık dönemini sürdürmekte olan Cumhuriyetçi Abraham Lincoln bitirici bir hamle tasarlar: Anayasa’da değişikliği giderek köleliği ilga etmek. Bu o güne kadar ABD anayasasında yapılan 13 değişiklik olacaktır. Tarihe de kısaca ’13. Amendment’ olarak geçmiştir. Anayasa’da kölelik kalkarsa, iç savaşın da sonu daha çabuk gelecektir.

Abraham Lincoln bakanlarıyla tartışıyor

Ancak önemli bir sorun vardır. Köleliği kaldırmak isteyen temsilci (milletvekili) sayısı gerekli çoğunluk için yeterli değildir. 20 oya ihtiyaç vardır. Bazı hükümet üyeleri havlu atmaya hazırdır. Lincoln diretir. Tek yol 13. Amendment’a karşı çıkan temsilciler arasından 20 tanesini satın almaktır. Bu işlerde uzman karanlık adamlardan küçük bir ekip oluşturulur. Zayıf halkalar tespit edilir. Kimine mevki vaadiyle, kimine rüşvetle, kimine baskıyla oylama günü “doğru oy kullanmaları” sağlanmaya çalışılır. Ancak oylama gününe kadar 20 oyun sağlanıp sağlanamadığı kesinleşmez.

Köleliği kaldırmak için gereken oy miktarı sağlanmaya çalışılırken Abraham Lincoln Güney’den gelecek bir barış heyeti ile görüşmeye zorlanır. Lincoln itiraz etmez. Aksi takdirde kendi cephesi de fire verecektir. Ama kurnazca bir yol izler. Güneyli barış heyeti ile görüşmeyi kabul eder ama heyeti yolu üzerinde bir noktada (o zamanlar malum uçaklar yok) oyalamaya karar verir. Ama esas kritik nokta, böyle bir heyetin varlığını parlamentodan gizlemesidir. Çünkü şeffaf davranırsa 13 Amendment’a karşı çıkan cephe oylamayı barış görüşmelerinin sonrasına erteletmek isteyecektir.

Thaddeus Stevens kürsüde

Nitekim korkulan olur. Tam oylama günü barış heyetinin Washington yolunda olduğu bilgisi sızar. Temsilciler Meclisi salonunda kıyamet kopar. Köleciler “oylamayı erteleyin” diye tempo tutmaya başlarlar. Bir ulak nefes nefese durumu Başkana bildirir. O da yuvarlak lafların ardına gizlenerek heyetin varlığını inkar eder. Oylamadan önce, köleciliğe karşı çıkan cephede radikallerin liderliğini yapan Cumhuriyetçi Thaddeus Stevens “Hayırcı” cephenin sözcüleri tarafından kürsüye davet edilir. Amaçları, sadece köleliğin kaldırılması için değil siyahlara tüm haklarının verilmesi için de mücadele eden Stevens’ı siyasal görüşlerini tüm çıplaklığıyla açıklamaya zorlamaktır. Kölelik taraftarları bu yolla “Evet” cephesini bölmeyi planlamaktadırlar çünkü bu cephenin içinde pek çok temsilci köleliğe karşı olmakla birlikte siyahlara tüm haklarının (örneğin oy hakkı) verilmesine karşıdırlar.

Thaddeus Stevens’ın kürsüde yaşadığı vicdan azabı filmin en dramatik sahnelerinden birini oluşturuyor. Görüşlerini tüm açıklığıyla dile getirse oylama kaybedilecek ve kölelik daha uzun yıllar devam edecek. Gizlese kölelik kalkacak ama Thaddeus da kendini bir bakıma inkar etmiş olacak. Tabi ki ikinci yolu tercih eder ve “Evet” cephesi az bir fakla oylamayı kazanır.

İç savaş günlerinde yaşıyor olsaydık köleliğin kaldırılması ve iç savaşın bir an önce bitirilmesi amacıyla da olsa siyasal ahlakı bir ölçüde çiğnedikleri için Abraham Lincoln’e ve Thaddeus Stevens’a karşı mı çıkardık yoksa, doğrusunu yaptılar mı derdik? Ben şahsen çok iyi yaptılar derdim.

Is education a panacea?

I was thinking to continue with the employment issue for today by focusing on education presented as a panacea and some times as a miraculous cure for improving the state of economic development. But I felt the need to check the number of columns I reserved recently on this field; I was surprised to notice that my last five columns were on subjects related to the labor market issues in one manner or other. While I was about to decide to shift into another field, I listened Saturday morning to George Papandreou, former Greek prime minister and president of the Socialist International (SI). Papandreou was invited to İstanbul by two Turkish Social Democrat think tanks, Turkish Social Economic Political Research Foundation (TÜSES) and the Social Democracy Foundation (SODEV) and by Friedrich Ebert Stiftung (FES), the German Social Democrat think tank.
Mohamed Bouazizi who immolated himself The SI president spoke, as it could be expected, about the socialist movement's policy responses to the problems arising from the clash between conditions imposed by irreversible globalization and the established social rights and welfare inside the limits of the old nation state. Saturday's conference was for me another occasion to note how terms like “educational reform,” “better education,” etc. constitute the leitmotiv in social democratic programs. To be fair, I should say that Papandreou pointed out the necessity of investing more in research and development (R&D) as well as in infrastructure to restart the growth machine, but finally it is obvious that great hope is being placed in education to cure structural illnesses. The Republican People's Party (CHP), a member of the Socialist International, does not constitute an exception. Its spokespeople also present educational reform as almost a unique step for solving our economic problems and they are not alone in this hope. The vice president in charge of economic affairs Ali Babacan does not miss a single occasion without mentioning how educational reform is important for Turkey. Although we are still waiting this reform, to give to Caesar what is Caesar's, the Justice and Development Party (AK Party) government sizably increased educational expenditures in recent years and compulsory education has been recently increased to 12 years. But Turkey needs much more given the pitiful state of the education level of the working age population. The average schooling for this population is roughly 7 years. For the sake of comparison let me point out that in South Korea this average reached almost 12 years. Beside quantity,quality also counts. Turkey, with Mexico, is in the bottom of the PISA ranking, an Organization for Economic Cooperation and Development (OECD) study measuring the quality of education. We are able to well educate a small elite, but unable to provide basic skills to the huge majority. No doubt, providing “more and better education” constitutes the main challenge for Turkey. The sooner the government starts comprehensive and radical reform in education the better it would be. But I am afraid that educational reform became in this country a panacea that would provide the opportunity to avoid difficult reforms, particularly those regarding labor market flexibility. Indeed, even if courageous education reforms are rapidly implemented, its contribution to economic development will start to emerge within a decade at the earliest. So, the question is what to do with the existing working age population, of which the majority is poorly educated and unskilled? Creating new jobs, particularly for women, should be accelerated as well as the increase of the labor productivity if we want a high and sustainable economic growth. This can not be achieved without courageous reforms in the labor market and without the help of large and efficient “on the job training” schemes. Now, let me point out that the government postponed indefinitely all labor market reform projects that were designed in the National Employment Strategy. Let me finish with another concern. More education alone could create more problems than it solves, if it is not placed within of a comprehensive and consistent growth strategy. One of the facts that struck me in the recent World Development Report 2013 - Jobs, was the very high unemployment rate among university graduates in Tunisia. This rate rose from 14 percent in 2005 to 30 percent in 2011. I am sure you remember well that the spark of the Arab Spring has been fired on Dec. 17, 2010, the day where Mohamed Bouazizi, a young Tunisian university graduate earning his bread as a peddler, immolated him self following the confiscation of his street cart.

Productivity or employment

This week, I participated in press conferences in both İstanbul and Ankara to announce the publication of “World Development Report 2013: Jobs,” prepared by the World Bank.
high productivity Nowadays, most countries suffer from high unemployment but also from what the World Bank calls “bad jobs,” that is, from unproductive, unsecure employment. Many countries still face the difficult problem of transforming millions of informal, poorly productive jobs -- in agriculture, for example -- into formal wage jobs. Let me just offer one figure in order the express the extent of the employment challenge the world is facing: According to Word Bank estimates, 600 million jobs need to be created in the next 15 years just to maintain current employment rates. The most striking feature of the report, I think, is that it takes into account the diversity of conditions prevailing in each country regarding economic development and the labor market. The World Bank identified eight categories of countries according to these conditions and explained how the nature of “good jobs” -- in other words, proper growth and employment strategies -- differs in each of them. To give you an idea of this diversity, I would like to note that a growth-employment strategy in an “agrarian economy” should not be similar to that of an “aging society.” versus high employment During these two press conferences, I focused my comments on four questions that constitute passionately debated subjects in Turkey: first, how increases in productivity versus employment must be balanced in terms of growth; second, how to integrate members of the youth population who are not working, studying or looking for a job into the labor market; third, what should be done with the existing stock of poorly educated, unskilled people; and fourth, how to address the issue of an aging population. The issues of idle youth and the aging population have been discussed recently in this column. So, allow me this time to focus on the first issue I addressed at the press conferences. In the period preceding the global recession, which was characterized by high growth (roughly 6 percent per year), most economists and the press in Turkey bemoaned the “jobless growth,” asserting that although the growth was there, it was not creating enough jobs. Indeed, if one considers the increase in total employment, limited to approximately to 2 percent per year on average, the capacity of that capacity of growth to create jobs was rather limited. I had two objections to this assertion, however. First, this economic growth was in fact creating enough jobs in non-agricultural sectors as this type of employment increased approximately 3 percent between 2003 and 2008. Secondly, this outcome cannot be considered a valid point of complaint for three basic reasons: The unemployment rate was kept around 10 percent, the high growth allowed for the move of people from poorly productive agricultural jobs into productive non-agricultural jobs and the value added workers increased rapidly, pushing up wages and overall per capita income. In the aftermath of the global recession, not only did very high growth prevail -- on average around 9 percent in 2010 and 2011 -- but it started to create a lot of jobs -- maybe too many! Indeed, the yearly increase in employment reached 6 percent in this period, significantly pushing up the capacity of growth to create jobs. Even in 2012, when growth decelerated tremendously, the increase in employment continued. One should note that this strong increase in employment in recent years is partly due to a surprising increase in agricultural jobs, with much of the remaining job creation happening in the service sector. So, we are no longer hearing the complaint about “jobless growth,” but should we happy about that? I am not sure. It is true that the unemployment rate has decreased by about one percentage point over the pre-crisis period and that labor force participation has increased. However, the increase worker productivity has decelerated significantly, to the point of nearly stagnating in the past year. Admittedly, the ideal situation for growth with regards to the productivity-employment balance would be one that is based mostly on productivity gains while at the same time allowing unemployment to decrease slightly. However, this is easier said than done.