Back to work
President Erdogan announced new incentives last week following his ambitious employment mobilization campaign launched earlier this year. Here are the details:
Employement incentives will carry over to 2018. What do employers need to know?
1 Tax and insurance premium of new jobs will be covered
All insurance premiums and taxes for every employee to be added to current employment rolls in the manufacturing and Information Technologies (IT) sectors will be covered by the government. Insurance premium support provided on minimum wage in the manufacturing and IT sectors will be provided for the first time on principal earnings. The insurance premium total of additional employees for salaries up to TRY 4,740 will be covered. Thus, in 2017, premium support from TRY 773 to 884 per employee will continue and these amounts will be extended to the minimum wage in 2018. Insurance premiums and taxation of each additional employee in other sectors will continue to be paid in 2018 as well as in 2017 based on the minimum wage.
2 Women, youth, and the disabled given special attention
To spur their participation in the workforce, the benefit period will be extended to 18 months for some groups, including youth between 18 and 25 years of age, women, and the disabled. The incentive program will remain in place until December 31, 2020, giving employers ample opportunity to plan ahead.
3 The government will pay six months’ salary for small business employees
The focus on youth employment will be extended to small businesses as well. For companies in the manufacturing sector, which have certificates of proficiency and employ three or less workers, hiring youth between 18 to 25 years will be incentivized with a six-month payment of salaries. In addition to basic pay, the government will also cover social security premiums and taxes for new hires from the beginning of 2018 on a bi-monthly basis, based again on minimum wage.
4 The duration of Occupational Training Programs will increase
Again focusing on manufacturing and IT sectors, the Occupational Training Programs implemented by the Turkish Labour Agency (ISKUR) will be increased to 6 months from three months in 2018. On-the-job training programs in other sectors will not see an increase, remaining at their current three months. People participating in on-the-job training programs will continue to be paid up to TRY 54 a day pocket money. Work-related accidents and occupational disease premiums of participants will continue to be covered with general health insurance.
5 Financial support will be provided for training participants
Young people between 18-29 who participate in on-the-job training future-oriented fields such as cybersecurity, renewable energy, cloud computing, and coding will be provided with training and daily pocket money of TRY 75 for up to 9 months. Women participating in on-the-job training programs in the industrial sector will be supported by TRY 400 monthly for child-care spending for each child between 2 and 5 years by ISKUR.
6 Public-Private partnerships in education
The Vocational Education and Skill Development Cooperation Project (MEGIP) will partner with employers’ organizations to provide vocational education and on-the-job training programs. The 2-year long pilot project will provide 8-month training sessions in which the unemployed who lack education and skills can receive theoretical and practical training. TRY 54 pocket money per day will be paid to project participants.
7 Improving employability
Accredited vocational training providers will be tasked with helping sectors facing procurement challenges to meet their skills shortages. While the tuition fees of these training programs are paid by ISKUR, the training institutions will be required to provide a realistic degree of employment guarantees so that trainees graduate with viable work prospects.
8 Social benefits of young people starting work will not be cancelled
Another focus will be on helping young people transition into the workforce. Employers will be given the opportunity to add occasional workers to their payrolls by notifying the Social Security Institution on the same day they are hired. Orphan’s pensions of youth between 18-25 will not be cancelled when they start work.
9 Grants will be provided to those who start a business
To support disabled entrepreneurs, those who have at least 40 percent disability on their disabled report and an entrepreneurship certificate in the sector in which they are planning a start-up, the grant provided by ISKUR will be raised from TRY 36,000 to TRY 50,000 in 2018. To facilitate the process, start-up proposals can be handed over to the Provincial Directorates of Labor and Employment Agency until December 29, 2017.
10 The additional financial burden will reach TRY 6 billion
Financial experts estimate the additional burden of the support package will amount to TRY 6 billion. Sources told Dunya the funding will not add any additional pressure on government coffers in 2018 compared to what was paid out in 2017. The 2017 payouts were excessive due to the pressure to hire new employees, the sources said. In the 11-month period of 2017, for instance, the amount of the transfer made by the Treasury to pay only 5 percent of the employer’s share of the social security premium was TRY 24.3 billion, which played a decisive role in boosting the budget gap.