Jobless Growth is What’s Next for Turkey?

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Today Stats Office reported an unemployment rate of 9.9% in September, slightly lower than the 10% threshold. A rate of workforce without job about to reach a 2-digit number is consequently worrisome for the economy but unnatural when the output measured in terms of GDP rises.

Before starting, I intent to put a chart as a supporting to my opinion that the what is going on in Turkey is jobless growth. Since the mid-2010, the trends of both real GDP and unemployment signal a jobless growth.

Turkey Real GDP Growth & Unemployment

What generally policy makers do is to concern much concentrated in income growth which is viewed as essential for employment generation. However, it is not a sufficient condition. Capital goods industry was alwyas viewed as the engine of growth but this did not generate non-agricultural employment at a rapid rate. All aside, there are demographic and structural grounds that the phenomenon of jobless growth is attributed to as well as they are what I would like to accentuate in this article.

The Gender Composition of Workforce in Turkey

From the title, it is easy to figure out where I will point. Female workforce participation is a explicative notion but on the other hand is a prove that the rising unemployment rate is just “statistical illusion”. Many researchers have come up with the importance of female participation when it comes to analyze the whole economy.

The awesome chart prepared by OECD shows the gender compositions of workforce on some countries. Needless to say, women participation in extremely weak compared to OECD countries. Some empirical work suggests that it is usually women workforce turning out to be self-employed. Consequently, women participation appears to decreasing while self-employed women generate the output that lifting the GDP growth. According to official data, the number of self-employed people was 4.2 million in Jan 2009 and had risen to 4.8 million until Aug 2013. Further research is needed in this area to extent the analyze of the effect of decreasing women participation, but, with broad strokes, the data seems like not to fully reflecting the facts.

Turkey - Labor Force Participation by Genders

Inadequate Education System

Recently, there has been arguments for Turkish students’ poor scores in PISA exams. Overall, Turkey was ranked at 39th among 62 countries. The results has been severely criticized by many whom generally has contrary politics visions to government, but this is ignoring the fact that Turkey was one of the the two fastest-progress-making countries, along side with Brazil. Non-contradictiously there are some advances in Turkish education but not good enough to push it forward. This is the point where I find the criticizers right. Despite the recent performance, the education system is still inadequate compared to OECD countries. The chart below is telling us a horrible story.

Attained-only-pre-primary-and-primary-education-Turkey

Theoretically speaking, inadequate educations system results in an acute shortage of skilled manpower. Today this is the most popular research area among economists covering Africa. The continent is the home for some countries with extraordinary fast growth rates but poor job numbers that resemble Turkey.

The Bottom Line

To sum up with, I consider to flash the key facts one more time necessary. The gender composition and educational background of both are key drivers of the recent deterioration of outlook for labor market in Turkey. The country requires social policies to encourage women to join the workforce. On the education side, government expenditure should increase in order to built the system more relevant to labor market demands.

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