Short-term unemployment outlook seems relatively benign, but…
XHead- on data looks to portray a rising unemployment rate. Seasonally adjusted data, however, signals the opposite. Monthly data is liable to vary, so we always attach more weight to adjusted figures. Indeed, previous data also pointed to the same pattern. Year-on-year, on a monthly basis, unadjusted unemployment may continue to rise. Adjusted data traces a downward curve, possibly stabilizing. Employment is likely to increase and the unemployment rate to fall in
Q3, while the 11-12% official unemployment rate should remain around its peak level for the next two quarters.
XEconometrically speaking, there is a curve and unemployment is not linear. Hence, the 2017-18 pattern should be seen as a combination that eliminates seasonality. We concur with the OECD that the 13% rate of 2009 will remain the highest point in the next two years, with some employment creation in progress.
Even accounting for differences in the labour force participation rate – a fair part of which is due to female status – it’s not easy to compare Turkish labor statistics with the EU, or even with the OECD. Better to look only at averages and accept the low female participation rate as a fact for many years, maybe decades, to come. The labour force participation rate is at 52.2% with a 0.9% increase, with the female rate at 32.9%, which is up by 1.3% year-on-year. Carrying it to 55-60%, as in Italy, for instance, would automatically render the unemployment rate very high indeed. It is also considerably below the OECD average of 47.5%. That variable is best treated as a cultural variable.
The OECD emphasizes the peculiarity of the recovery in Turkey. After Lehman, the stagnation lasted almost a decade, but following a secular downward trend the OECD unemployment rate average is now back to 5.9%. Turkey’s unemployment is likely to remain in low double digits, and youth unemployment at about twice that in future years, with the possibility of a repeat of the 13% peak after 2020. This is so, even though employment has continued to grow after the 2007-09 crisis: a 20% increase in the total labor force, from 40% in Q2 2009 to 48% in Q4 2016.