Turkey - mutual learning programme

TURKEYRegarding the social security contribution reduction aspect of the incentive policy in Spain, someinference can be made for implementation in Turkey: among the root causes of the highincidence of informality in the labour market in Turkey, one can argue for relatively high costs ofemployment to be borne by the employer. For this reason, reductions in the social securitycontribution would serve for some kind of formalization of certain casual-informal employmentrelations. However, considering extent of the pools of workers mentioned above as well as thelow level of labour force participation, such an incentive in form of reductions should carefully bedesigned especially in terms of targeting the vulnerable groups in the labour market.As for the financing of the incentives through unemployment insurance fund, the generalagreement among social partners in Spain seems as if the issue has not been debated as acontroversy. For the case of Turkey it’s worthwhile to note that the legislation regardingUnemployment Insurance is quite restrictive in terms of eligibility conditions as well as coveragethough a significant amount of surplus has already been accumulated. There is a contemporarydebate, which has not been resolved yet, about reforming the current legislation by extending theeligibility conditions and duration of payment of benefits to cover more of the formally registeredlabour force and use of surplus of the Fund which consists of premiums jointly paid by theemployer, employee and state (3 percent, 2 percent and 2 percent of gross wage, respectively).In a nutshell, one can argue that contemporary labour market in Turkey has certain drawbacksthat hinder the discussion of the policy transfer. Formal-informal dualities, legislative rigidities,jobless growth, low levels of participation should all be separately analysed and considered inassessment of potential implementation regarding all aspects of policy either financing, coverageor evaluation. As also mentioned by the Spanish trade union representatives that have signed the2006 Agreement, peculiar nature of the social dialogue in Spain has also contributed to theconsensus between all social partners. In this regard, the potential transferability of the policymeasure remains highly limited since it remains as a by-product of the country-specific context.3. Contemporary Debates in TurkeyNot to replicate the above mentioned debates, here one must also consider labour market reformdebate in Turkey which has been grounded on the “employment creation” in relation to the recentexperience of growth without jobs. Apparently, it should be noted that any design for reform forencouraging job creation should consider certain measures to ensure protection of workerbesides protection of the job. For instance, while enhancing flexibility in the labour market, currentsegmented structure should be considered so as to be complemented by measures in the form ofenhanced social protection. Lacking such mainstreaming in the policies, current debates remainmarginal as they address solely certain features. When analysed in detail, new Labour Code inTurkey has introduced a certain level of flexibility in terms of employment protection legislation.However, debates on flexibility have constantly been locked in numerical flexibility 55 , externallabour market flexibility 56 and wage flexibility aspects due to short term concerns. As this ishindering a more holistic approach, enhancing improvements in safety nets through not only a55 Often in terms of flexibility of time, through the use of atypical employment types or engaging in subcontractingpractices.56 Especially by the introduction of new types of contracts in the new Labour Code.16-17 November 2006 Peer Review Incentives for indefinite employment, Madrid102