Seyfettin Gürsel Boğaziçi University Demir Demirgil Conference, April 18, 2008 MYTHS & REALITIES OF THE TURKISH LABOR MARKET Seyfettin Gürsel Bahçeşehir University Center for Economic and Social Research (BETAM) 18.04.2008, İstanbul
Seyfettin Gürsel Boğaziçi University Demir Demirgil Conference, April 18, 2008 MYTHS & REALITIES OF THE TURKISH LABOR MARKET Seyfettin Gürsel Bahçeşehir.
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Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
MYTHS & REALITIESOF THE TURKISH LABOR MARKET
Seyfettin Gürsel
Bahçeşehir University Center for Economic and Social Research (BETAM)
18.04.2008, İstanbul
MYTHS & REALITIESOF THE TURKISH LABOR MARKET
Seyfettin Gürsel
Bahçeşehir University Center for Economic and Social Research (BETAM)
18.04.2008, İstanbul
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Myth 1: Growth without employmentMyth 1: Growth without employment
Table 1 Non agricultural growth (%) and
non agricultural employment (thousands): 2000-2003
NA Emp.* Change Growth 2000 12.960
2001 12.607 - 2,7 % - 5,4 % 2002 13.040 3,4 % 5,8 %
2003 13.121 0,6 % 6,3 %2000/2003 Increase of employment 1,2 %/ GDP
growth 6,3 %Growth elasticity of employment = 0,2
*recalculated by BETAM acc. to TURKSTAT’s 2006-2007 revised figures
*recalculated by BETAM acc. to TURKSTAT’s 2006-2007 revised figures
Right, but this was only the case in 2003Right, but this was only the case in 2003
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Non agricultural GDP & Non-farm Employment (2000-2007, seasonally adjusted)
Non-farm GDP & Non-farm (2000-2007, seasonally adjusted)
Non-farm GDP
Non-farm Employment
14500
15500
16500
17500
18500
19500
20500
21500
22500
23500
00(1
)
00(2
)
00(3
)
00(4
)
01(1
)
01(2
)
01(3
)
01(4
)
02(1
)
02(2
)
02(3
)
02(4
)
03(1
)
03(2
)
03(3
)
03(4
)
04(1
)
04(2
)
04(3
)
04(4
)
05(1
)
05(2
)
05(3
)
05(4
)
06(1
)
06(2
)
06(3
)
06(4
)
07(1
)
07(2
)
07(3
)
07(4
)
No
n-f
arm
GD
P,
98 p
rice
s, m
illi
on
TL
12000
12500
13000
13500
14000
14500
15000
15500
No
n-f
arm
Em
plo
ymen
t, t
ho
usa
nd
s
Non-farm GDP Non-farm Employment
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Myth 1: Growth without employmentMyth 1: Growth without employment
Table 2Non agricultural growth (%) and
non agricultural employment (thousands): 2003-2007
NA Emp.*2003 13.1212004 13.5052005 14.5952006 15.2412007 15.588
Change (03/07) 18,8 %Growth (03/07) 36,1 %
Increase of employment 18,8 %/GDP growth 36,1 % Growth elasticity of employment = 0,52
(Long term elasticity estimation = 0,5 TÜSİAD, 2004)
Absolutely wrong since 2004: High employment involved high job creation
Absolutely wrong since 2004: High employment involved high job creation
*recalculated by BETAM acc. to TURKSTAT’s 2006-2007 revised figures
*recalculated by BETAM acc. to TURKSTAT’s 2006-2007 revised figures
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Table 3The unemployment rate: 2000-2007
Unemployed* Global U. Rate
2000 1.405.000 6,82001 1.846.000 8,7
2002 2.312.000 10,3 2003 2.339.000 10,5 2004 2.344.000 10,3 2005 2.365.000 10,32006 2.295.000 9,92007 2.333.000 9,9
Myth 2: Unemployment does not decrease despite growthMyth 2: Unemployment does not decrease despite growth
Yes
Yes, if one takes into consideration the number of unemployed people and the global unemployment rate.
Yes, if one takes into consideration the number of unemployed people and the global unemployment rate.*recalculated by BETAM acc. to TURKSTAT’s 2006-2007 revised figures
*recalculated by BETAM acc. to TURKSTAT’s 2006-2007 revised figures
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Table 4The non agricultural
unemployment rate: 2000-2007
2000 9,32001 12,42002 14,52003 13,82004 14,32005 13,6 2006 12,3 2007 12,3
Myth 2: Unemployement does not decrease despite growthMyth 2: Unemployement does not decrease despite growth
No, if one takes into consideration the nonagricultural unemployment rate.
No, if one takes into consideration the nonagricultural unemployment rate.
No
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Why Does Not the Number of Unemployed Decrease Despite Growth?
Why Does Not the Number of Unemployed Decrease Despite Growth?
Because Labor Force is very flexibleBecause Labor Force is very flexible
Table 4Non agricultural employment
and labor force (thousands): 2000-2007 Employment* Labour force*
2000 12.960 14.2932001 12.607 14.392
2002 13.040 15.251**2003 13.121 15.2212004 13.505 15.7582005 14.595 16.892
2006 15.241 17.4392007 15.588 17.835
**Strong added worker effect: Increase from 2001 to 2002 is 6,2 %.
*recalculated by BETAM acc. to TURKSTAT’s 2006-2007 revised figures
*recalculated by BETAM acc. to TURKSTAT’s 2006-2007 revised figures
Non-farm Labor Force Elasticity
(2003-2007)
Labor Force Growth / Employment Growth =
0.92
Non-farm Labor Force Elasticity
(2003-2007)
Labor Force Growth / Employment Growth =
0.92
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Non-farm Labor Force & Non-farm Unemployed (2000-2007, seasonally
adjusted)
Non-farm Labor Force & Non-farm Employed (2000-2007, seasonally adjusted)
Non-farm Labor Force
Non-farm Employment
12200
13200
14200
15200
16200
17200
00(1
)
00(2
)
00(3
)
00(4
)
01(1
)
01(2
)
01(3
)
01(4
)
02(1
)
02(2
)
02(3
)
02(4
)
03(1
)
03(2
)
03(3
)
03(4
)
04(1
)
04(2
)
04(3
)
04(4
)
05(1
)
05(2
)
05(3
)
05(4
)
06(1
)
06(2
)
06(3
)
06(4
)
07(1
)
07(2
)
07(3
)
07(4
)
Lab
or
Fo
rce,
th
ou
san
ds
Non-farm Labor Force Non-farm Employment
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Myth 3: Participation rate(s) decreases
Myth 3: Participation rate(s) decreases
YesYes, if one takes into
consideration the nation wise aggregate level.
LFPR2001 49,82002 49,62003 48,32004 48,72005 48,32006 48,02007 47,8
The main reason of this decrease is the decrease
of the female LFPRLFPR
2001 27,12002 27,9*2003 26,62004 25,42005 24,82006 24,92007 24,8
*Strong added worker effect
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Myth 3: Participation rate(s) decreases
Myth 3: Participation rate(s) decreases
No, if one takes into consideration the
nonagricultural LFPR (approx. by the urban
rate).LFPR
2001 43,32002 43,82003 43,82004 44,52005 45,52006 45,52007 45,4
The main reason of this increase is the increase
of the female LFPR.LFPR
2001 16,82002 18,7*2003 18,52004 18,32005 19,32006 19,92007 20,2
*Strong added worker effect
No
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
We have another story for 2007; but..
Urban Total & Female Labor Force Participation (2000-2007, seasonally adjusted)
Urban Labor Force Participation
Urban Female Labor Force Participation
0.430
0.435
0.440
0.445
0.450
0.455
0.460
00(1
)
00(2
)
00(3
)
00(4
)
01(1
)
01(2
)
01(3
)
01(4
)
02(1
)
02(2
)
02(3
)
02(4
)
03(1
)
03(2
)
03(3
)
03(4
)
04(1
)
04(2
)
04(3
)
04(4
)
05(1
)
05(2
)
05(3
)
05(4
)
06(1
)
06(2
)
06(3
)
06(4
)
07(1
)
07(2
)
07(3
)
07(4
)
To
tal
0.160
0.165
0.170
0.175
0.180
0.185
0.190
0.195
0.200
0.205
0.210
Fem
ale
Urban Labor Force Participation Urban Female Labor Force Participation
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Myth 3: Participation rate(s) decreases
Myth 3: Participation rate(s) decreases
The story can be simplified as follows:
At the aggregate level LFPR is basically driven by two adverse effects related to the female labor:
While the female labor decreases in Agriculture, where the participation rate is high,
it increases outside the Agriculture where the participation rate is low (this increase is due to the effect of educational level).
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Labor Force Participation by Gender and Education; Male & Education
Male Participation Rates by Education (2000-2007)
Male Illetarate
Male Less than High School
Male High School
Male Higher Education
0.36
0.41
0.46
0.51
0.56
0.61
0.66
0.71
0.76
0.81
0.86
00(1
)
00(2
)
00(3
)
00(4
)
01(1
)
01(2
)
01(3
)
01(4
)
02(1
)
02(2
)
02(3
)
02(4
)
03(1
)
03(2
)
03(3
)
03(4
)
04(1
)
04(2
)
04(3
)
04(4
)
05(1
)
05(2
)
05(3
)
05(4
)
06(1
)
06(2
)
06(3
)
06(4
)
07(1
)
07(2
)
07(3
)
07(4
)
Male Illetarate Male Less than High School
Male High School Male Higher Education
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Labor Force Participation by Gender and Education; Female & Education
Female Participation Rates by Education (2000-2007)
Female Illetarate
Female Less than High School
Female High School
Female Higher Education
0.13
0.23
0.33
0.43
0.53
0.63
0.73
00(1
)
00(2
)
00(3
)
00(4
)
01(1
)
01(2
)
01(3
)
01(4
)
02(1
)
02(2
)
02(3
)
02(4
)
03(1
)
03(2
)
03(3
)
03(4
)
04(1
)
04(2
)
04(3
)
04(4
)
05(1
)
05(2
)
05(3
)
05(4
)
06(1
)
06(2
)
06(3
)
06(4
)
07(1
)
07(2
)
07(3
)
07(4
)
Female Illetarate Female Less than High School
Female High School Female Higher Education
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
The unpleasant realityThe unpleasant reality
Non Agricultural Labor Force is driven by a trend increase of more than 3 %. Our estimation is 3,3 %; (TÜSİAD, 2002). From 2002 to 2007 non agricultural LF increased by 3,6 %.
The minimum number of net jobs to be created outside of agriculture in order to keep constant the unemployment level at 2.300.000 equals 500.000.
In this case the unemployment rate will be steadily decreasing.
Otherwise, unemployment will increase and/or labor force participation will decrease, more likely both.
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
The unpleasant realityThe unpleasant reality
This level of job creation means an increase of 3,2 % in the non agricultural employment.
If we consider the growth elasticity of employment as 0,5, the required growth rate of non agricultural GDP equals 6,4%.
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
The unpleasant realityThe unpleasant reality
Turkish economy did not get over this threshold during the past two
years.
Shall it be capable to perform such an ambitious growth rate in the
future?
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Selected Labor Market Indicators
Employment Index (2000=100)
Total Employment
Non-agricultural Employment
Agricultural Employment
75
80
85
90
95
100
105
110
115
120
125
2000 2001 2002 2003 2004 2005 2006 2007
Total Employment Non-agricultural Employment Agricultural Employment
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Selected Labor Market Indicators
Participation Rates (15-64, 2006, Eurostat)
0
10
20
30
40
50
60
70
80
90
Turkey Italy Greece Romania Poland Spain EU15 UK
Male Female
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Selected Labor Market Indicators
Unemployment Rates
Extended Unemployment Rate
Unemployment Rate
Non-agricultural Unemployment Rate
0.06
0.08
0.10
0.12
0.14
0.16
0.18
2000 2001 2002 2003 2004 2005 2006 2007
Extended Unemployment Rate Unemployment Rate Non-agricultural Unemployment Rate
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Selected Labor Market Indicators
Labor Dynamics (2000=100)
Non-agricultural Employment
Unemployed
Discouraged
50
100
150
200
250
300
350
400
450
500
2000 2001 2002 2003 2004 2005 2006 2007
Non-agricultural Employment Unemployed Discouraged
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Selected Labor Market Indicators
Educational Level of Labor Force (Urban, 2007)
0
1000
2000
3000
4000
5000
6000
Illitarate < High school High school > High school
tho
usa
nd
s
Male Female
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Turkey's demographic transition (1923-2050)
40,00
30,00
20,00
10,00
0,00
10,00
20,00
30,00
40,00
50,00
60,00
1923
1927
1932
1945
1950
1955
1960
1965
1970
1975
1980
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
Crude birth rate (‰) Crude death rate (‰) Population increase rate (‰)
Selected Labor Market Indicators
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Urban Male Participation Rates by Age
0.0
20.0
40.0
60.0
80.0
100.0
15-19 20-24 25-34 35-54 55+
Age
%
1990
2006
Selected Labor Market Indicators
Seyfettin Gürsel
Boğaziçi University Demir Demirgil Conference, April 18, 2008
Urban Female Participation Rates by Age
0.0
5.010.0
15.0
20.0
25.030.0
35.0
15-19 20-24 25-34 35-54 55+
Age
%
1990
2006
Selected Labor Market Indicators
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