Turkish gov’t makes new promises on economy ahead of elections

ANKARA

Daily News photo

Prime Minister Ahmet Davutoğlu has announced a series of measures worth around 7.5 billion Turkish Liras to increase employment, spanning from vocational training support for employers to tax reliefs, ahead of parliamentary elections in June.

The package includes a 4-billion-lira boost to pensions and the creation of 120,000 temporary jobs, said Davutoğlu at a press conference with the government’s leading economy ministers in Ankara on April 2. The package has 11 articles, including a job-training program, insurance premium contributions by the state, additional tax breaks for investments and Treasury guarantees.

The measures “won’t have a negative impact on either the budget or economic balances,” because it will lead to an increase in tax income and employment, spurring growth, Davutoğlu said. 

“We will comfortably reach the 4 percent growth target this year,” he said, blaming bad weather conditions and the slowdown in European economies on 2.9 per cent growth in 2014.

“Our key priority as the government is to switch to high technologies, production with higher added value and higher employment,” Davutoğlu said.

The latest global economic crisis proved economies with production-based industries and which create new employment could more easily resist economic crises, while service-based economies proved weaker, he said.

The new package would create 120,000 new jobs by increasing the number of people employed in public utility professions, he said.

“Turkey achieved a figure of 1.4 million new jobs created in 2014,” he said.

The 11-step package starts with support for the Turkish Employment Organization, İŞKUR, for employers in the private sector to pay trainees minimum wage during a six-month vocational training period.

“If the trainees are employed in the same sector following their training, İŞKUR will pay the employer’s national insurance contribution for 42 months in the manufacturing sector and 30 months for other sectors,” he said.

The second step is a 50 percent rise in tax relief for enterprises which are making investments.
Davutoğlu further said new investors in 2015 will enjoy more support and tax reliefs.

He added Treasury-backed warranties would be expanded so as to involve small and medium scale enterprises (SMEs) in manufacturing as well as female entrepreneurs.

He said they initiated a new practice to ease women entrepreneurs’ access to financing and accordingly increase women employment.

“It will enable women entrepreneurs a warranty of 85 percent for five-year-term credits up to 100,000 Turkish liras,” he added.

Other measures include canceling taxes on forward good imports. Turkey’s development bank will be reorganized to support production and employment, and the government will submit a bill to parliament allowing small and medium-sized companies to use movables as collateral, he said.

Pressure is building on the Turkish government to revive the economy after the GDP has seen a slowdown in growth, the unemployment rates have been increasing and the economic confidence index has been deteriorating.