Unemployment rises in tandem with slowdown

ISTANBUL- Hürriyet Daily News

The improvement in the labor market ended in July, said Özgür Altuğ Chief Economist at BGC Partners. Hürriyet photo

Turkey’s unemployment rate increased from 8 percent in June to 8.4 percent in July on the back of economic slowdown, but the figure was still lower than the 9.1 percent rate of July 2011, according to data released yesterday by the Turkish Statistical Institute (TÜİK).

The seasonally adjusted unemployment rate also rose to 9.1 percent from 8.9 percent during the same period. Turkey’s economy added 545,000 jobs in July 2012. Non-agricultural unemployment dropped from 11.8 percent in July 2011 to 10.7 percent in July 2012, while youth unemployment dropped from 18.3 to 16.3 percent.

“We see that the improvement in the labor market ended in July. In fact, there should be a decline in headline unemployment rate in July compared to June, but there was some increase despite the peak tourism season, construction season and the harvest,” said BGC Partners Chief Economist Özgür Altuğ in a note to investors yesterday.

“Along with weak industrial production, loan and capacity-utilization data, the unemployment rate could convince the Central Bank to deliver a 100 bps [basis point] cut in the upper end of its interest rate corridor, while we think that considering the high level of inflation a 50 bps cut would be more appropriate,” he said.

Labor and Social Security Minister Faruk Çelik said in a written statement released after the figures were announced that the government planned to reduce unemployment to 5 percent by 2023 and that it was commendable that Turkey had managed to bring down its unemployment rate by 0.7 percent since last year while the European Union was struggling with an economic crisis and unemployment.

Economy Minister Zafer Çağlayan also said yesterday that the unemployment figure was less than the 9 percent 2012 Medium Term Program target and added that Turkey’s unemployment rate had dropped to its lowest figure since the 2001 economic crisis.

“Look at the past two months: We are breaking the employment record. This month it is 46.6 percent. People don’t really focus on this figure, but it is as important as the unemployment rate.... Our economy has been able to add 545,000 jobs since last year,” he said.

Çağlayan, however, admitted there could be a slight rise in unemployment in the coming months due to seasonal factors and the economic slowdown, but said the main trend toward growth, exports and job creation was more important than slight fluctuations.