Unemployme­nt almost at single digits

Dünya Executive - - COMMENTARY - Alaatt n AKTAS Economist

The first quarter, usually considered the worst months for unemployme­nt in Turkey, is behind us and the unemployme­nt rate declined to 10.1 percent in March. 10.1 percent is the lowest unemployme­nt rate for the month since 9.7 percent in 2014. With April data, which will be the average figure for March, April and May - a period in which unemployme­nt historical­ly experience­s some improvemen­t - we will probably see the unemployme­nt rate decline down to single digits.

When we look at April data for the last four years, it is always single digit, except last year, and last year was an exception. We never saw a single digit unemployme­nt rate in 2017.

If history holds, we should see single digit unemployme­nt for the first time in two years. The last was May 2016, when we saw unemployme­nt drop to 9.4 percent.

Is t susta nable?

There is actually no big difference between an unemployme­nt rate of 10.1 percent and 9.9 percent but there is a psychologi­cal threshold that is being crossed. It does matter though how the unemployme­nt rate declines to single digits. Turkey pursued a series of measures to boost employment but these measures produced only short-term results – they encouraged companies to hire more people rather than creating more jobs or new employment areas.

These measures have a cost. That cost rests on the shoulders of everyday citizens because we can’t really say that this increase reflects an increase in production.

Not a natural ncrease

Turkey has tried to increase employment with blunt force, from incentive to incentive, coercively, compelling­ly. And it does succeed. But it is not sustainabl­e! We can’t solve this problem without creating new employment areas, encouragin­g job creation and ensuring this employment increase translates into a production increase.

The labor force rose by 578,000 from March 2017 to March this year while employment rose by over one million in the same period. So, we found jobs for 2,800 people every day during this 365day period. We created enough employment to bring the number of unemployed people down by 432,000 compared to March last year. If it’s possible to continue at this pace for one or five more years, it’s not an issue. But if the blunt force must stop – and it must - we should start taking steps in advance to prevent another spike in unemployme­nt.

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