Crisis swells the ranks of jobless in Turkey

Hurriyet Daily News with wires

refid:10786862 ilişkili resim dosyası

The unemployment rate in Turkey rose to 10.9 percent in the three months preceding November, the biggest annual increase since 2005, as the global credit crisis pushed the country closer toward recession.

The rate increased from 9.7 percent in the same period last year, the Turkish Statistical Institute, or TÜİK, said on its Web site yesterday. The jobless rate was 10.3 percent one month earlier. Turkey’s economy grew 0.5 percent in the third quarter, its slowest pace in six years. The global crisis has slashed demand for Turkish-made goods, such as cars, prompting manufacturers to suspend production and shed jobs. At the same time, about 1 million people joined the workforce over the past year as Turkey’s population grew.

"Industries such as textiles and construction are all labor-intensive and the car industry has started to layoff workers," Bloomberg quoted Türker Hamzaoğlu, economist at Merrill Lynch in London, as saying. This year "looks like a lost year for employment, there is not much the government can do about it."

Deal with the IMF
"This jump in the unemployment rate is pronounced and I expect it to get worse before it gets better," Reuters quoted Yarkın Cebeci, an economist at JP Morgan in Istanbul, as saying. "The government should agree on a deal with the IMF, without losing more time and announce its package of measures."

Government officials are in talks with the IMF on a new loan to succeed a $10 billion pact that expired in May. The accord may seek to rein in government spending as budget revenues decline amid slower growth. Turkey added 251,000 jobs in services, construction and manufacturing in the three months leading to November, from the year earlier, while agricultural jobs rose 384,000, TÜİK said.

The jobless rate has risen on an annual basis for the past five months, as the global crisis slashes demand for Turkish-made goods. Tofaş, Fiat’s Turkish unit, this month announced plans to sack almost 900 workers as sales slump at home and abroad.

"We will eventually see as much as 15 percent unemployment: it is going to give rise to serious social problems," said Nurettin Özdebir, chairman of the Ankara Chamber of Industry.

Worrisome trend
Unemployment among 15 to 24-year-olds was 21.5 percent in the three months leading up to November, the highest rate for the month since 2005, the statistics agency said. About 21.9 million people were employed in the period, compared with 21.3 million a year earlier, it added. The workforce participation rate, a measure of how many people of working age are working or seeking employment, rose to 49.1 percent, from 47.7 percent a year earlier, TÜİK said.

"Things are not going to get better any time soon, given the truly awful global backdrop," Timothy Ash, the head of Central Eastern Europe and Middle East and Africa, or CEEMEA, research at the Royal Bank of Scotland, told Hürriyet Daily News & Economic Review yesterday.

"Indeed, my sense in terms of the CEEMEA region is that the real impact or adjustment is only just beginning," Ash said. "The best short-term thing the government can do is resolve uncertainty over the relationship with the IMF. As Turkey's key vulnerabilities remain in external and public sector financing, a funded IMF program would help fill the gaps in financing and reassure investors."

Unakıtan said apart from the automotive industry, the government also planned to help stem rising unemployment and to provide incentives to encourage mergers between companies.

As a result of discussions handled at the Economy Coordination Council, instead of enabling insurance premium discounts for companies, we have decided to provide them with "unemployment help" to retain workers, not to fire them. The help will be provided in the form of cash, not credit, Unakıtan said. No further details were provided of government plans. Unakıtan urged companies to seek alternative markets as well as focusing further on innovation projects. Benefiting from incentives, increasing quality and competitiveness are also quite important, he added.

An International Monetary Fund mission is currently in Ankara for talks on a loan agreement with Turkey to help it weather the financial crisis. Government sources told Reuters in December that Turkey wanted loans totaling around $25 billion. A previous $10 billion standby agreement with the fund expired in May, but until recently the government was reluctant to opt for another loan program.

Turkish economic growth in the third quarter was at its lowest level since 2002, at 0.5 percent, and the government has taken steps to ease the burden on borrowers, boost access to credit and stimulate economic activity.