Leading labour economist: Labour Market Has Frozen

This is the translation of an article by Prof Seyfettin Gursel, chairman of university-linked BETAM Think-tank, and one of the leading labour economists of Turkey.  It was originally published in independent T24.com.tr   news site.

For now, we have very little statistical information about how these people can sustain their lives. But we know from the extremely dramatic stories reflected in the media and told around us that there are great traumas. 

October statistics that were announced this Monday, show a freeze in Turkey’s labour market, including the September-October-November period. While non-agricultural employment (MEA) has decreased by 5 thousand, the number of unemployed has increased by 30 thousand. Therefore, while the non-agricultural labour force has increased by 25 thousand, the non-agricultural unemployment rate has increased from 14.8 percent to 14.9 percent.

The non-agricultural unemployment rate climbed up to 16.4 percent in June when only those who were actively seeking jobs and those who were officially employed as a result of the sudden and hard-hit of the corona epidemic were taken into account. Since then, the unemployment rate has started to decline,  bottoming at 14.8 percent in September. You know why: When the restrictions on economic activities were lifted, roughly half of the employment and labour losses were recovered, and unemployment rates declined as employment growth was higher than the increase in the labour force during this time.

How Has the Labour Market Froze?

First, let me explain briefly what I mean by the “freezing” metaphor. In my unemployment article last month, I pointed out that the rate of increase in employment has halved. The pace of growth not only in employment but also in the workforce was decreasing. As the pace continued to decline in October as well, a frozen labour market landscape emerged.

In general, I try not to overwhelm the readers with numbers, but this time it is necessary to convey the changes in non-agricultural employment and labour force from June to October: from June to July, non-agricultural employment first increased by 571 thousand, in the pursuant data months, these increases decelerated,  respectively, to 262 thousand and 259 thousand. In the October period, improvement suddenly stopped, with 5 thousand decrease in non-agricultural employment from September to October. The increase in the workforce started at  465 thousand, continued with 186 thousand, 150 thousand and finally, the increase faded to 25 thousand. The number of unemployed also decreased gradually as a result of these changes, but this decrease was replaced by an increase of 30 thousand in the October period. The declining unemployment rate also increased from 14.8 percent to 14.9 percent, turning up its direction.

At this point, there are still big employment losses compared to the start of the corona period. Compared to January 2020, there were 680 thousand losses in non-agricultural employment and 770 thousand losses in the labour force in October 2020. When we look a little closer to the October picture of the labour market, especially to the details of the sectors, it is clear that these losses cannot be easily recovered.

Alarm Bells in the Service Industry

Employment in the industrial sector increased by 67 thousand from September to October. There is no obvious slowdown in the pace. Employment has almost reached the level of January 2020; with cumulative employment loss declining to 70 thousand. This counts as the full side of the glass.

On the empty side of the glass, there is the situation of the services sector, the largest employment source in the economy. Unfortunately, alarm bells started to ring again in this sector. Employment in services increased by 400 thousand in July, followed by increases of 147 and 188 thousand. However, from September to October employment decreased by 70 thousand. Compared to January 2020, there are still over 700 thousand jobs lost in this sector. When the November period figures covering October-November-December are announced, we can easily predict that employment losses in this sector will continue to increase.

In the construction sector, the situation is not bright either. As a result of very  low-interest housing loans urged on banks by former economy czar Mr Berat Albayrak, a strong increase in employment was observed since May. The increase from period to period was over 100 thousand. However, the rate of increase receded to around 10 thousand in the periods of August and September. Construction employment decreased by 2 thousand in October. It is hard to  optimistic about the contribution to employment from this sector in the near future, as mortgage loan rates continue to climb.



The Underwater Part of the Unemployment Iceberg Begin to Expand

So far, we have focused on the part of the unemployment iceberg that is visible above the water. We know, there is also a huge part underwater. I also try to visualize this part of my monthly unemployment posts.

The number of citizens who stated that they wanted to work but were not looking for a job and therefore were not registered as unemployed was approximately 2 million 600 thousand in January 2020. Parallel to the great losses in the workforce, this number increased rapidly and reached 4 million 700 thousand in May, and decreased to 4 million 260 thousand in August with the increases in employment. Thus, a  very limited improvement. Unfortunately, the number of actually unemployed has increased since September. This number has exceeded 4 million 600 thousand as of October. To put it differently, compared to January 2020, 2 million people are added to the population of citizens who desire to work but are not looking for a job.

For now, we have very little statistical information about how these people can sustain their lives. But we know from the extremely dramatic stories reflected in the media and told around us that there are great traumas.

It feels like accessing what is known but we can not stop assiduously repeating the truth: Turkey’s society has been experiencing high unemployment for approximately three years now, and it is increasing rapidly, and again for a long time it seems it will continue, unfortunately.




Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and www.paraanaliz.com and has contributed to the financial daily Referans and the liberal daily Radikal.