Short-term unemployme­nt outlook seems relatively benign, but…

Dünya Executive - - STATISTICS -

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.

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