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.