Employment Packages in Turkey ( ) Gökhan GÜDER Head of Department for Labor Market Policies Ministry of Development

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1 Employment Packages in Turkey ( ) Gökhan GÜDER Head of Department for Labor Market Policies Ministry of Development

2 Context and Background: Labor market parcitipation rates are traditionally low for women; 24,5% in ,8%, 2011 Unemployment rates are high for the youth; 18,4%, 2011 (9,8% for 15+) Non-wage labor costs are high in general Higher LF participation of women will enable economic growth to be more equitable and sustainable Skills mismatch, poor school-to-work transition mechanisms, low level of experience and high expectations from labor market make young people vulnerable in the labor market, especially in economic crisis periods High share of young people in the population necessitates to better activate young people in Turkey Low LF parcitipation and high unemployment rates for youth put important challenges for social security balances, long term economic development prospects, etc. 2

3 Objectives of the Employment Packages Objectives Increasing LF participation rates for women Increasing LF participation rates and decreasing unemployment rates for young people Main interventions that achieve the objectives Decreasing the recruitment costs in general Decreasing the recruitment costs of women and young people Decreasing the recruitment costs of people with vocational education Increasing the budget for active labor market policies 3

4 2008 Employment Package Incentive Category Benefits/Requirements Financing Source General 5 points decrease in employers social security contributions Treasury Women above 18, Men % decrease in employers social security contributions for 1st year, 80% for 2nd, 60% for 3rd, 40% for 4th and 20% for 5th Unemployment Insurance Fund Active Labor Market Policies Scope of active labor market policies are extended to all unemployed people Unemployment Insurance Fund Active Labor Market Policies Budget allocated for these policies is increased to receive up to the 30-50% of government contribution to the UIF Unemployment Insurance Fund 4

5 2011 Employment Package - Duration and scope of the employment incentives are redetermined - Holding vocational qualifications, graduation from a vocational/technical schhol and registration to Turkish Employment Agency (İŞKUR) are taken into account - 5 point decrease in employer social security contributions continues - Benefiting from two employment incentives at the same time is made available - Budget for active labor market policies is increased to receive 30% of all UIF premium incomes of the previous year 5

6 2011 Employment Package Category Vocational Qualification Status Benefit Period Women above 18, Men Men above 29 Vocational Qualification Certificate Holders Graduates of Vocational High Schools/Technical Colleges Graduates of İŞKUR Vocational Training Programs None Registered as unemployed to İŞKUR Vocational Qualification Certificate Holders Graduates of Vocational High School//Technical Colleges Graduates of İŞKUR Vocational Training Programs Registered as unemployed to İŞKUR 48 months 36 months 36 months 24 months Additional 6 months 24 months 24 months 24 months All above 18 Registered as unemployed to İŞKUR 6 months Additional 6 months 6

7 Results and Findings Labor Force Participation Rate Turkey ,3 46,2 46,9 47,9 48,8 49,9 - Women 23,6 23,6 24, ,6 28,8 - Men 69,9 69,8 70,1 70,5 70,8 71,7 - Young (15-24) 37,4 37,7 38,1 38,7 38,3 39,3 - Young (15-29) 45,7 46,1 46,9 47,7 47,7 48,4 Employment Rate 41,5 41,5 41,7 41, Women ,6 22, ,6 - Men 62,9 62,7 62,6 60,7 62,7 65,1 - Young (15-24) 30,3 30,2 30,3 28, ,1 - Young (15-29) 38,3 38,5 38,9 37,4 38,9 40,9 Unemployment Rate 10,2 10, ,9 9,8 - Women 11, ,6 14, ,3 - Men 9, ,7 13,9 11,4 9,2 - Young (15-24) ,5 25,3 21,7 18,4 - Young (15-29) 16,2 16, ,6 18,4 15,6 7

8 Results and Findings - LFPR for women improved more than men and the previous period - Unemployment rate for young improved more than +15 and the previous period - Employment rate for young people improved compared to the previous period 8 A B C C-B LFPR-W 4,3 0 1,2 1,2 LFPR-M 1,6-0,1 0,9 1 UR ,2 0,1-2,1-2,2 UR ,1 1-3,3-4,3 UR ,4 0,2-2,8-3 ER-15+ 3, ER ,8-0,1 2,1 2,2 ER ,2 2 1,8

9 Results and Findings - Number of beneficiaries of employment packages and other employment measures in 2011 are given below Employment Package 2008 Employment Package Points Decrease Active Labor Market Policies Women Men (18-29) Total ,8 million - 6,8 million (2008) (2011) (2008) (2011) 9

10 Lessons and future priorities 10 - Incentives should be designed in line with labor market needs and should be utilized by the market - Flexibility of incentives is important, they should be revised easily depending on the changes in the labor market ( employment packages) - Having a reserved amount of fund beforehand is important to respond labor market crises without creating extra budgetary complications (Turkish unemployment insurance fund case) - Impact analysis studies are needed to understand truly the results of incentives and design better policies (WB study for training programs of İŞKUR) - Setting a definite end date for incentive policies is important, otherwise they will be extended further under political pressures although the labor market conditions are changed (Turkish incentives for women and young men will end in 2015)

11 Advice to Other Countries? Having institutiona l mechanisms and reserve resources beforehand to respond adequately in crisis times is important Conducting impact analysis in an experimental manner with the beginning of incentive policies would help to understand what works and would provide a good signal for when to stop A joint and coordinated act of all related social partners is important especially crisis periods, having working institutional mechanisms for that 11

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