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The Effectiveness of theEmployment Policies Implementedin Turkey in the Times of EconomicCrisis∗∗Hatice Erol**-
Abdullah Özdemir***Abstract:The global economic crisis manifests its adverse impactsparticularly on labor
markets. The countries, in anattempt to elimi-nate the unfavorable impacts of the economic crisis, primarily
striveto prevent an upsurge in unemployment via various measures. Tur-key, as other countries, introduced a
number of measures under thename of “response packages” in order to revive bothdomestic andforeign demand,
to increase capital inflow and to open up internalloan channels. The measures on employment are basedon
general-izing active labor policies towards the flexibilityof labor, adoptionof lifelong learning strategy, short-run
employmentcreative pro-grams for the unemployed and promotion of flexibleworking mod-els.Key
Words:Economic crisis, unemployment, active employmentpolicies, passive employment
policies.INTRODUCTIONWith the globalization process, the impacts of anyeventhappened in any place of the world
are instantly felt in othercountries as well. The U.S. financial crisis of 2008 that emerged in the banking sector with
the mortgage deadlock tolater gain a global dimension was reflected in other countriesand sectors, and took the
whole world under its effect. The fi-nancial crisis that manifested itself in every field of the econo-my, even though
it started in the financial sector,adversely af-fected employment in particular. In that period, millions ofpeople lost
their job, or they turned to informal work. Workerseither consented to work at lower wages for fear oflosing
theirjob, or to work in non-standard jobs.Though today it is widely accepted that the impactsof glob-al crisis are
about to end, its unfavorable effecton labor mar-kets is expected to persist. The past crisis experiences suggestthat
recovery to pre-crisis employment levels in labor marketswill take more time than other sectors.Countries, with an
aim to eliminate the adverse effects of the2008-2009 economic crisis, strive to prevent an increase in un-
employment through adopting incentive policies in order to in-crease production by boosting consumption, thus
tokeepbusinesses running. In Turkey, as in other countries of theworld, a number of measures were introduced
againstthe crisisunder “the name of “packages of measures” that aimed to re-vive internal and external demand.
To increase capital inflows,and to open domestic credit channels. However, dueto the de-lays in taking necessary
measures and poor effortsto sustainemployment, the adequacy of packages of measures inalleviat-ing
unemployment and eliminating the negativities arising fromunemployment should be discussed.The main purpose
of this study is to investigate the effec-tiveness of different employment policies, and to present, in thelight of
these, policy suggestions for reducing unemploymentin Turkey.To this end, first, the study will focus on the
changes in la-bor markets caused by the global crisis: Then, thegeneralstructure of Turkey’s labor will be described,
andin the subse-quent part of the study, anti-unemployment policiesand em-ployment policies enforced in Turkey
will be elaborated. THEGLOBALCRISISANDLABORThe International Labor Organization (ILO) reports(ILO,2011-2010-
2009) revealed that “the breaking” that began inSeptember, which turned into a global financial crisis in a
shortperiod of time, left millions of people unemployedthroughout2009. The reports emphasized that even if the
expected “re-covery” in the World’s economies after 2010 was realized, itwould take a long process even to get
back to the pre-crisis pe-riod for masses of people, who became unemployed, or whosework conditions worsened,
and became deprived of “decent”job opportunities. ILO, in its reports, defines theimpacts of thecrisis upon the
labor world, and provides its suggestions as fol-lows (BSB, 2011: 33-35);•If an international agreement is not
reached on “aspecialpackage of measures for employment”, the majority of theunemployed that reached 212
million across the world in2009 (43 million according to ILO) will be increasingly rele-gated to “the status of long-
term unemployed”, andwill bepermanently excluded from the labor markets”. ILO defineslong-term
unemployment as referring to people who havebeen unemployed 12 months or more. In the frameworkofthe said
definition and according to the Turkish StatisticalInstitute (TurkStat) data for July 2011, 28.2%–707
thousandpeople–of open unemployed in Turkey fall within thisstatus.•The ongoing stagnation in labor markets
increases thenumber of discouraged, excluded workers. For example, inthe United States–paradise of flexible
employment–thenumber of discouraged exceeded 800.000. This figure, al-beit definition differences, is 1 million
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915 thousand peoplein Turkey (TurkStat, 2011a). That is to say, LaborForceParticipation Rate (LFPR) is decreasing
all over the world,and workers are compelled either to part time formsof em-ployment, or to informal
employment lacking socialsecuritycoverage. Aside from the rise in unemployment, part-time andinfor-mal
employment will also increase due to the globalfinan-cial crisis; with the spread of informal employment,
laborforce will be increasingly deprived of social security services.•Another dimension of the informalization in
employment isthe deprivation from unemployment insurance coverage.Besides, unemployment insurance funds
are used to meetnon-employment expenditures by many governments.•Underdeveloped economies experience
informal employ-ment processes that cannot be explained by the crisis condi-tions. The groups that have lost their
secure job opportunitybecome willing “to work under any condition”.•For developed economies, “short-term” and
“job-change in-terval” unemployment gradually turns into “long-term”,“permanent” unemployment, and
employment rates persistat high levels even for these economies.•The recession in employment and the increase
in discour-aged masses of unemployed people manifest themselvesundoubtedly in the form of rapid erosion of
wage incomes.In Turkey, the economic contraction caused by the crisisexerted its first impact on employment; the
crisisin the realeconomy turned into the employment
crisis.GENERALSTRUCTUREOFLABORMARKETINTURKEYToday, unemployment is the major problem of all
societies.TurkStat defines the unemployed as individuals among those,who are not employed in the reference
period (who did notwork in any job for profit, daily wage, paid or unpaid, and whodo not have connection with
such job), who have used at leastone of the job-seeking channels in the three months, and whoare ready to start
work. The LFPR, unemployment andem-ployment rates are the primary indicators of the labor market.Turkey’s
labor market, however, fails to provide favorable datain terms of these indicators.The data pertaining to labor
force in the Turkish economyare primarily based on the results of the “Households Labor Force Survey” conducted
by Turkstat. The said surveys presentthe structure of the labor market in Turkey. Turkey’s non-
institutionalpopulation was 72 million 421 thousand people in July 2011.The potential labor force, which is defined
as working-age indi-viduals aged 15 and above, became 53 million 635 thousandpeople in the same period.Its
potential population of 18 million 786 thousandunderaged 15 opens the demographic “window of opportunity”
forTurkey. However, education and employability of this intensepopulation is at the same time an important
futureproblem ofTurkey.Only 51.2% of the population that constitute nearlyhalf ofthe population above 15 years
of age classified aseconomicallyactive in Turkey participate in the labor market. That is to say,26 million 173
thousand people cannot be included in laborforce. LFPR, which is 72.9% for men, is merely 30.3% forwomen.
Though there are various reasons for such LFPR forwomen, the primary reason is that women are not able to
takepart in work life as much as it should be. In Turkey, womencomprise 11 million 603 thousand people engaged
inhouse-work. Homemakers will certainly want to work when they areprovided with appropriate working
conditions and job opportu-nities. In addition, non-participation of the retired 3 million 606thousand people in the
labor market is dubious, because theretired people strive to re-enter in the labor market due to lowpensions.In
Turkey, the unemployment rate, which was in therangeof 6.5% to 7.5% until the 2001 financial crisis, raised to
9.5%-10.5% level after 2001 to remain chronic within this range.Then, the adverse effects of the 2008-2009
economiccrisisbegan to be felt in the labor markets. The data provided in Ta-ble 1 show that the unemployment
rate that reached14% in 2009 decreased to 9.1% in July 2011 (2 million 509thousand), while the youth
unemployment rate, which was 25.3% in2009, merely decreased to 18.3%. However, as a result of theexclusion of
potential labor force from the labor market, thissegment is not reflected in the unemployment figures. Accord-ing
to the TurkStat data for July 2011, According to the Turk-Stat data for July 2011, 1 million 915 thousand ofnearly
26million 173 thousand people excluded from the labormarketare comprised of those, who do not seek job, but
are ready towork. 37.000 seasonal workers are considered out ofthe labormarket due to climate conditions. When
time-relatedunder-employed 539 thousand people and inadequately employed440 thousand people are taken into
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account, Turkeyfaces aphenomenon of unemployment far beyond TurkStat’s unem-ployment figures.The sectoral
evaluation of unemployment points to aser-vices- and agriculture-based structure. According to TurkStat(2011a)
figures, in Turkey, 26.9% of people were employed inthe agricultural sector; 18.9% in the industrial sector; 46.7%
inthe services sector. Despite the employment decrease in theagricultural sector, jobs enough to absorb the
population, wholeft the agriculture sector, cannot be created in non-agriculturalsectors. Besides, some of those,
who became unemployedduring crisis due to the contraction in the industrial sector, mi-grated to jobs in the
agricultural sector. Althoughagriculturalemployment continuously decreased starting from the2000s, ittends to
increase with the global economic crisis.The numberof those employed in this sector rose from 4 million 867 thou-
sand in 2007 to 5 million 254 thousand in 2009. Asfor the in-dustrial sector, employment fell from 4 million
314thousand to4 million 130 thousand in 2008. Employment in the servicessector continues to increase compared
to the pre-crisis period.In the period of 2008-2009, while some of the unemployed mi-grated to the agricultural
sector, some got discouraged in jobsearch. The number of discouraged people, which was612thousand people in
2007, reached 930 thousand in February 2009. Thus, the 2009 average was realized as 757 thousandpeople
(TurkStat, 2011a).The ongoing relative upward trend in the working-age popu-lation in Turkey despite a slowdown
in the population growthrate exerts an intense pressure on labor markets. It should bekept in mind that each year,
the working-age population in-creases by nearly 800 thousand, and that about 48%of themjoin the job-seeking
group. While in the1988-2009 period, theworking-age population increased by 17 million 940thousand,the
increase in employment was merely 3 million 523thou-sand. This is the main sign of failure in providingthe
growingpopulation with adequate job opportunities. Poor economicgrowth and investments hindered the
establishment of macro-economic stability in the long run. This resulted in limited jobopportunities as a result of
frequent economic crises and stabil-ity programs adopted thereafter (Erol et al., 2010:11).The Turkish economy
has always had limited capacitytocreate jobs. The failure of turning high growth rates achieved inrecent years into
increased employment is one of its indicators.The main means of increasing employment and
decreasingunemployment is to create new job areas by enhancing in-vestments. However, persisting high
unemployment rates ofrecent years have more clearly demonstrated that this does notalways work in this way
(Bağdadioğlu, 2009: 109).The economic contraction experienced in Turkey withtherecent global crisis led to
increase in unemployment and de-crease in employment. Uncertainties brought by the crisis envi-ronment
coupled with the existing structural problems of thelabor market prevent the creation of new job
opportunities.High unemployment rates in Turkey are expected to linger forsome time. It is also expected that the
labor market will the ef-fects of the limited economic revival predicted forthe upcom-ing period with delay (Erol et
al., 2010: 11). Because of all the-se data, in the process of formulating economic policies, un-employment is
acknowledged as the major problem, and anti-unemployment policies are designed. In Turkey, as in other
countries of the world, a number ofanti-crisis measures were introduced under the nameof “pre-vention
packages” in order to revive internal and external de-mand, to increase capital inflows and to open domestic
creditchannels. The measures taken both by the Undersecretariat ofTreasury and the Central Bank of Turkey are
classified as thebanking sector the measures to ensure cash inflow to the mar-kets in particular, “Liquidity Support
Measures”, “Tax SupportMeasures” that provide for reduction in VAT and SCT, “Invest-ment Support Measures”,
“Production- and Exports-OrientedCredit and Guarantee Support Measures”, “Regulations onCredit Utilization and
Credit Cards”, “Research-DevelopmentSupport Measures” and “Employment Support Measures”(BSB, 2011: 57).In
Turkey, the costs of the measures such as tax reductions,expansion of public consumption and investment
andexten-sion of credit facilities in the 2008-2010 period correspondedto 6.6% of GDP of the same period (SPO,
2009). Yet,it can besaid that the delayed enforcement of financial measures wasinstrumental in the Turkish
economy’s contraction that ex-ceeded 12% (Öz - Altuğ, 2011).In Turkey, measures in many different types and
scopeswere successively introduced through employment supportpackages, and the duration of some incentives
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wereextendedby the subsequent inventive package. While some ofthe incen-tives applied to all employees, some
incentivized the employ-ment of the disadvantaged groups such as young adults, wom-en, and the disabled. Not
only certain arrangementsweremade to prevent job losses, but also a number of measureswere introduced to
incentivize employers for additional em-ployment.ANTI-UNEMPLOYMENTPOLICIESANDTHETURKISHPRATICEThe
fight against unemployment is carried out in two ways.The first method is called active employment policies that
referto measures and arrangements for avoiding unemployment risk. These policies are multi-aspect economic
andfinancialmeasures, and effective and long-term policies anddecisionsfor savings, investment and employment
relations. The secondmethod is to establish institutional structures, which, for a tem-porary period of time, cover
losses of income arising from un-employment that constitutes a socioeconomic risk. These insti-tutional structures
also cover the losses of incomes of unem-ployed until they find a new job, or until they complete theireducation
that will enable them to be employed in new sectors,and ensure the continuity of their income (Çetin, 2007: 27).
InTurkey, during the period of economic crisis, employment in-centive packages and active and passive
employmentmeasures were simultaneously implemented in an attempt toprevent unemployment, and to solve
the problems caused byunemployment. Among the labor market-oriented measures,employment incentives for
employers and vocationaltrainingprovided through ĐŞKUR are in the forefront.In an effort to encourage the hiring
and retentionof womenand youth, Law No. 5673 was put into effect in May2008. TheLaw provides that the
employer share of social security contri-butions for women above 18 years (with no age limit) and men(aged 18-
29) recruited between May 2008 and May 2010 hasbeen covered for a period of five years by the
UnemploymentInsurance Fund (UIF). Starting at 100 per cent the first year,the subsidy decreases to 80% in the
second year, to60% in thethird year, to 40% in the fourth year and to 20% inthe fifth. Be-sides, the employer’s
contribution rate was reducedby fivepoints starting from 1 October 2008.Other incentives provided to employers
are as follows; theobligation of employing 1% ex-convicts and 2% victims of ter-rorism imposed on enterprises with
50 or more employees wasrepealed. Although the obligation of employing 3% disabledremained in effect, and it
was stipulated that theemployershare of social security contribution for disabledpersons wouldbe covered by the
Undersecretariat of Treasury. Theobligationfor firms with 500 or more employees to provide sport facilitieswas
repealed; outsourcing of healthcare services has been al lowed under the responsibility of workplace healthand
safetyunit and workplace doctor. Under the said employmentincen-tive package, unemployment insurance
payments to the un-employed were increased by 11%, and unemployment insur-ance coverage was extended.Law
No. 5838 on labor markets, which was enacted inFeb-ruary 2009, provided improvements in the requirements
forbenefiting from short-term employment allowance incrisis en-vironments. Furthermore, the starting date of
incentives, whichwas set as 29 June 2009 by Law No. 5763, was extended toJune 2010 by Law 5838.Law No. 5921
of August 2009 is another legal arrangementthat has introduced certain employment incentives.Under thisLaw, the
employer’s part of social security contribution as cal-culated over the lowest contribution base shall bepaid by
theUnemployment Insurance Fund for a period of 6 months. Thelegislation also provides that if persons benefiting
from unem-ployment allowances are placed in jobs starting from 1 October2009, employers’ and workers’ social
security contributions andgeneral health insurance contributions shall be paid by the Un-employment Insurance
Fund throughout the remainingperiodof entitlement to unemployment benefits. Hence, forthe firsttime, along
with the employer’s share of social security contri-bution, that of the worker has begun to be coveredby theFund.
The legislations have aimed for re-employmentof un-employed people as soon as possible, and thus to mitigate
theeffects of unemployment on the Fund resources.Additional employment incentives, along with the April
2009average number of workers, covered those recruiteduntil 31December, and by Law No. 5951, the benefit
period was ex-tended until 31 December 2010.The Council of Ministers Decree on State Support for In-vestments
No. 2009/15199, which was put into effectin July2009, allowed for the coverage of the employer’s share of so-cial
security premium for the new employed by the Treasury fora certain period of time. Under the New Incentive
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Package, in-vestments in the 1stregion would be provided with the support of the employer's share of social
security premiumfor twoyears. The said term of period was progressively increased ac-cording to the regions to
become seven years for the 4thre-gion.The “Short-Term Employment Programme”, which was putinto force in
2004, turned into an effective tool for fightingagainst unemployment. The 3-month benefit period
ofthisprogramme was extended to maximum 6 months in 2008,2009 and 2010 owing to the crisis, and the amount
of allow-ance was increased by 50%. In 2009, 192.444 peoplewerebenefited from this programme, which aimed to
prevent dis-missals in enterprises, where production and employment werecontracted due to economic crisis and
other unfavorable con-ditions.With an aim to alleviate individual and social impacts of un-employment, public
works programme was initiated in2009 aspart of active employment programmes. The programmecon-tinued in
2010 and 2011 as well. The programme aimed fortemporary employment of the unemployed in public works
andservices such as renovation of schools and hospitals, or ar-rangement of parks.With Law No. 6111 of 25
February 2011, which was alsoknown as Bag Law among the public, amendments werebrought to the utilization of
UIF, unemployment insurance andshort-term employment allowance.The seventh paragraph of Article 48 of Law
No. 4447wasamended by Article No. 69 of Law No. 6111. This amendmentallowed for the use of up to 30% of
premium revenues ofĐŞKUR transferred to UIF the previous year for the purpose oforganizing active employment
programs and to administer la-bor market research and planning (it can be increased up to50% with the Council of
Ministers Decree). Along with the ex-isting fields of use, the UIF was incorporated issues such asenhancing
employability of labor force, and introducing andimplementing measures to increase and sustain
employment.Thus, the utilization field of UIF was expanded thatwould allowfor wider use of resources in the fight
against unemployment. With Law No. 6111, “youth and women employment pro-motion” that expired in June
2009 was re-introduced; the em-ployer’s part of social security contribution calculated over thelowest contribution
base would be paid by UIF. Those, whocompleted vocational and technical secondary and higher edu-cation, or
those, who completed labor training courses held byĐŞKUR, shall benefit from employment incentives for
differentterms of period according to gender and age groups.Hence,not only the incentives for youth and women
employment,whose validity period was expired, were re-introduced, but alsoa number of incentives were brought
into effect forpeople withcertificate of vocational training. The incentive introduced forvocational training will
make vocational training more appeal-ing, and thus will solve the problem of qualified labor. All women above 18
yearsof ageand men between aged 18 and 29 will be eligible tobenefit from incentives for 24 months in normal
recruitment, or for 30months if registered withĐŞKUR; for 36 months if graduatedfrom formal vocational training
schools orĐŞKUR vocationalcourses, or for 42 months if registered withĐŞKUR; for 48months if they are with
certificate of professionalcompetence,or for 54 months if registered withĐŞKUR. Men above 29 yearsof age with
certificate of professional competenceor vocationaltraining certificate will benefit from incentives if they are not
re-cruited: Among those working upon a service contract (thoseworking under 4/A), those with certificate of
professional com-petence and those graduated from formal vocationaltrainingschools will be able to benefit from
incentives for12 months.Enterprises, who recruit people registered withĐŞKUR otherthan those listed above will
be eligible to benefitfrom incentivesfor six months. Contrary to the former incentives,the incentivesintroduced by
Law No. 6111 have made it more attractive forpeople to be employed in their trained or specialized area.In
addition,ĐŞKUR provided entrepreneurship counselingand training; job training was supported in the framework
ofon-the-job training. The participants were paid TL15 per daythroughout the vocational training. Some projects
were grantedTL 4000 at the end of entrepreneurship programs. The traineeswere paid up TL 15 for the first six
months. All these made at-tractive these programs, most of which did not guarantee em-ployment, for
unemployed people.ĐŞKUR has assumed an ac-tive role in the formation and implementation of
employmentsupports. The following sections of the study willfocus on thebeneficiaries and consequences of active
and passive labor pol-icies adopted byĐŞKUR particularly during the crisis
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periods.ACTIVELABORMARKETPOLICIESANDTHETURKISHPRACTICEActive market policies include a number of

policiesthat aimto help the unemployed find work in the labor market and toenable their placement in job (Kapar,
2006: 344).In Turkey, active labor market policies mainly include com-ponents such as vocational training, on-the-
job training, ap-prenticeship and counseling during the job application process. Besides, through Public Works
Programmes, the unemployedare provided with temporary employment to make themhaveincome.Vocational
Training and Labor Force Training CoursesEspecially from the end of the 1990s, Turkey has adoptedan
industrialization policy towards enhancing internationalcompetitiveness through shifting the sectoral component
ofproductive investments from labor-intensive sectorsto technol-ogy-intensive sectors. The transformation in the
sectoral struc-ture and organization of production brought about the need forimprovement in the qualifications of
labor force and trainingpolicies in line with changing conditions (Oğuz, 2011: 8-11).For this purpose, great weight
was placed on policies towardsimproving the efficiency of labor force training courses con-ducted byĐŞKUR and
strengthening the vocational training-employment relationship.Considering the number of unemployed people
between2002 and 2008, labor force training courses that aim for thetraining of the youth, women, the disabled,
ex-convicts, thelong-term unemployed and the unemployed falling within thescope of unemployment insurance
(the groups most affectedby unemployment, thus are considered the disadvantageousgroups in the labor market)
in the most needed vocations toenhance their employability are at adequate level.Table 3 be-low contains the
number of labor force training courses andthe number of participants in the 2002-2008 period: As can be seen in
Table 3, in the 2002-2008 period,24.648people attended 897 employment guaranteed courses held.The number of
people attended 494 courses for thosesettingup their own business was 8.535. 17.024 people attended 648courses
held for the disabled, while the number ofpeople at-tended 970 courses for ex-convicts was 14.467. 14.936 peo-
ple attended 961 courses held in the scope of unemploymentinsurance.In 2009 and 2010,ĐŞKUR used resources
amounting to TL1 billion 6 million for vocational training, and the number ofparticipants increased significantly.
While 79.430 people participated in total 3971 courses heldbyĐŞKUR in the 2002-2008 period, the number of
people at-tended 10.113 courses held in 2009 was 213.852 andthenumber of those participated in 11.821 courses
heldin 2010was 211.627, as can be seen in Table 4. In the first six monthsof 2011,ĐŞKUR organized total 7.250
labor force trainingcourses, and 101.251 people participated in these courses. Abudget of TL 220.570.005 was
allocated for these activities(ĐŞKUR, 2011c: 10).According to theĐŞKUR data, 55.086 out of 205.231, whowere
placed in jobs in 2010, were employed following the voca-tional courses. 15.635 out of those placed in jobsthrough
thevocational courses were women, and the remaining 39.451were men (ĐŞKUR, 2010b: 49). One of the main
criticisms ofĐŞKUR’s vocational training activities is that the program givesthe participants very limited
opportunities for guaranteed jobs.In addition,ĐŞKUR initiated new practices such as entrepre-neurship
programmes to help the unemployed, who want toset up their own business, and to benefit from thesupport pro-
vided by KOSGEB to the entrepreneurs following thetraining,and apprenticeship programs to make the
unemployedgainvocational experience.Job and Vocational CounselingJob and vocational counseling services help
peoplechoosethe most appropriate job to match their skills, talents, personal-ity and ambitions. The services also
ensure peoplebenefit fromvocational training opportunities, and help them with jobplacement and orientation
(ĐŞKUR, 2010: 50). Table 5 showsjob and vocational counseling services provided byĐŞKUR be-tween 2002 and
2010. ŞKUR’s job and vocationalcounseling services showed a significant increase in 2009 and2010, during which
the effects of the crisis continued. Howev-er, considering the number of the unemployed, it isclear thatthe number
of those benefited from these services is still low.Public Works ProgrammePublic Works Programme (PWP) was
launched in 2009 inthe framework of active labor market programs. Public WorkProgramme aims for short-term
employment and training ofthe unemployed directly or through contracting forpublicworks in times of intense
unemployment or in regions with highunemployment, or in the states of emergency such asdisastersand crises.
The participants, who are financially supported for acertain period of time, adapt to the work environment, gain vo
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cational training, job experience and discipline, and at thesame time conducts an activity in the public interest.PWP
includes job activities in environmental cleaning, reno-vation of public infrastructure, landscaping, maintenance,
re-pair and sanitation in public schools affiliated tothe Ministry ofNational Education, protection of historical and
natural herit-age, restoration, afforestation, park arrangements,valley andstream improvement and soil erosion
prevention.These programs are held for periods of up to six months,and participants are paid at monthly minimum
wage.Besides,Social Security Insurance Premiums of participantsare coveredby ĐŞKUR.According to the ĐŞKUR
reports, in 2009, 44.628 peopleparticipated in 1613 programs held in the frameworkof PWP,while the number of
the participants attended 1838programsheld in 2010 was 38.761. The benefit period for thePro-gramme was
determined as six months, and no extension wasgranted to it.It is observed that WPW and ĐŞKUR create tempo-
rary/makeshift jobs, and that some public servicesthat shouldbe carried out by regular/permanent staff are
attempted to bemade temporary by the state. Thus, not only unemployed peo-ple are provided with temporary
jobs, but also somepublic ser-vices are carried out without employing permanent staff, andare financed by UIF
instead of relevant institutions. Taking intoconsideration the extremely limited number of people benefitedfrom
UIF, conditions for benefiting from unemployment insur-ance must be expanded rather than using the
Fund’sresources(Çelik, 2011). Moreover, there is a need for a mechanism thatwill transform the employment
limited to six monthsin theframework of PWP to permanent employment.When evaluated in general, the active
labor marketprogramshould incorporate the following features (Öz, 2010: 30):•Its scope must be extended in
order to ensure a significantdecrease in unemployment. •It must have integrity so as to maintain employment, to
cre-ate new employment, and to ensure vocational training, jobplacement and social security.•It will be helpful to
determine the target group.•A vocational training-focused planning will facilitate the shiftto normal
employment.•It will be helpful in formulating such policies that householdsurveys conducted by national statistical
institutes containquestions about employment
programmes.PASSIVELABORMARKETPOLICIESANDTHETURKISHPRACTICEPassive labor market policies are
measures that aimfor so-cial development along with economic growth, and fair andequal income distribution,
which thus are prerequisites for theprinciple of being a social state.Unemployment that has been rising as a result
of theeco-nomic crisis has confirmed the importance of unemploymentbenefits that cover unemployment
insurance and assistance.The unemployment insurance system, which has beenimple-mented both in many
developed and developing countries asthe most effective method in unemployment payments,is con-sidered as
way of distributing social income and ensuring socialjustice as required by being a social state, and isa type
ofcompulsory insurance, which is usually establishedby thestate.Unemployment InsuranceUnemployment
insurance is a program, which covers theincome loss of individuals, who are unemployed though theyhave desire,
skill, health and ability to work at acertain rate,and which operates through insurance technique.In Turkey, UIF
comprises the major part of passive em-ployment programs. With Law No. 4447 dated 25 August1999,
unemployment insurance has been made compulsoryfor all insurants falling within its scope. The premium
contribu-tions of employees, employers and the state began to be col lected starting from 1 June 2000 at country
level to be trans-ferred to UIF. Article 46 of Law No. 4447 provides that the pur-pose of unemployment insurance
is “to establish therules andprocedures regarding unemployment insurance and thecodesof practice, and to
ensure, in case of unemploymentof insur-ants, the fulfillment of payments and services stipulated in thisLaw”. In
addition, under Article 48 of the Law, insurants, apartfrom unemployment allowance, shall be paid sicknessand
ma-ternity insurance premiums, and shall be provided with servicessuch as placement in new job and vocational
training and de-velopment courses. Unemployment insurance is basedon “theprinciple of compulsion”. Certain
conditions have to be met inorder to benefit from unemployment insurance. Firstly, thetermination of
employment of individuals must incorporate thecriteria specified in the Law; necessary conditionsmust havebeen
completed in order to benefit from the insurance allow-ance; the individuals must apply in person to UIF indue
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timeand must declare that they are ready for a new job.In Turkey, unemployment payments from UIF have com-
menced as of 1 March 2002. Between 2002 and end-2008,1.455.238 people applied to the system; 1.286.400
peoplewere entitled for unemployment benefits; total paymentsamounted to TL 1.828.703.960. The number of
applicationsand the amount of payments substantially increasedwith theeconomic crisis. From the second half of
2008, the payments from UIFshowed a significant increase compared to the previousmonths. As can be seen in
Table 6, in the first months of 2009,the number of monthly applications reached 70.000,and thenumber of paid
people exceeded 300.000. The applicationsdecreased with the alleviation of the effects of the economiccrisis.
From March 2002 to end-November 2011, total.965.270people applied to UIF; 2.388.914 people were entitled for
un-employment benefit. Total TL 4.470.341.990 were paid in thesaid period (ĐŞKUR, 2011b).Unemployment
benefit that aims to provide the insured un-employed with a limited income for a certain periodof time isgoverned
in detail by Law No. 4447. According to the abol-ished provision of Article 50 of Law No. 4447, daily unemploy
ment benefit was 50 percent of the previous net earnings of theinsured, being calculated by taking into account
the earningsof the last four months that constitute basis for premium.Thus, the amount of unemployment benefit
would by nomeans exceed net amount of monthly minimum wage applica-ble to workers above 16 years of age
working in theindustrialsector. However, certain amendments were brought tothe cal-culation method and ceiling
amount of unemploymentbenefitby Law No. 5763. Accordingly, daily unemployment benefitcorresponds to 40% of
daily average gross earning calculatedby taking into account the earnings basis upon premium of theinsured
person in the last 4 months. The unemployment bene-fit calculated in these terms shall not exceed 80%of the
grossamount of monthly minimum wage applicable to employeesabove 16 years of age. The said amendments
were putinto ef-fect as of the end of July 2008.Setting the ceiling amount of unemployment benefitso asnot to
exceed 80% of gross amount of monthly minimum wagedoes not comply with the realities of Turkey. Considering
thatin Turkey, minimum wage is below the poverty line,it is clearthat the determined amount of unemployment
benefitcannotprotect the individual against the risk of poverty,and that is in-adequate to secure minimum level of
subsistence. Inaddition,setting the ceiling amount as maximum 80% of grossamountof minimum wage is unfair for
ex-high-paid workers,who paida high amount of premium. Therefore, it will be more fair to setunemployment
benefit by taking account the former incomeand premium payments of the individual. The beliefthat suchlow level
of the ceiling amount will prevent the individual frombeing overcome by complacency and thus, will forcehim
orher to find a job immediately does not overlap muchwith therealities of working life.By Law No. 6111, those
under part-time employment con-tract have been offered with the opportunity to payoptionalunemployment
insurance premium. Hence, all part-time em-ployees, who pay unemployment insurance premium, are now able to
benefit from unemployment benefit and short-term al-lowance.Short-Term Employment AllowanceDespite its
relatively limited financial components,“Short-Term Employment Allowance (STEA)”is one of the mostwidely
implemented and most visible measures relating to labormarket. In the beginning, this program was broughtto life
forworkers employed in enterprises, whose duration ofproductionand period of employment was either shortened
or completelystopped due to a financial crisis or other unfavorable externalcauses. Short-term employment is
defined as temporary short-ening of the employment period in the whole or partof theworkplace by at least one-
third, or complete or partial suspen-sion of operation for at least four weeks without the conditionof continuity
not longer than three months. Employees are en-titled to share from the STEA fund upon the approval of
theMinistry of Labor. Employees are required to meet followingconditions in order to be entitled to short-term
allowance:a)The employer’s request for short-term employment shouldbe approved by the Turkish Employment
Agency.b)In accordance with the Article 50 of Law No. 4447,the em-ployee should have been entitled to
unemployment allow-ance in terms of their employment period and the amountof days of unemployment
insurance payment on the date ofthe commencement of short-term employment.The STEA is calculated on
monthly basis for the unworkedperiods so as to complete weekly working time applicable inthe workplace.
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Previously, this amount was calculated as 40%of the employee’s daily average gross earnings in the last
fourmonths. Besides, it was stipulated that the said amount wouldnot exceed 80% of legal minimum wage payable
to thoseabove 16 years of age. In the beginning, STEA was payable notlonger than three months, from February
2009, it was in-creased by 50%, and the benefit period was extendedto sixmonths. Law No. 6111 has allowed for
the practice of short-term al-lowance in the times of sectoral and regional crises, along witheconomic crises and
force majeure causes, and the scope ofshort-term employment was extended. The amount of STEAwas set as 60%
of the average earnings in last 12 months so asnot to exceed 150% of monthly gross minimum wage, and
itsamount was increased. Although the STEA benefit period wasdetermined as three months, and was stipulated
thatthe pay-ments would be deducted from the duration of unemploymentallowance, the Council of Ministers was
authorizedto decide toextend the specified duration, and whether the STEAbenefitperiod would be deducted from
the duration of unemploymentallowance. Due to general economic crisis, the duration ofshort-term employment
was extended to six months for theyears 2008, 2009 and 2010; the amount of allowancewas in-creased by 50%,
and the said payments were not deductedfrom unemployment allowance. With the Council of MinistersDecree,
this duration was further extended by six months, andthe extended duration was deducted from the initially
calculat-ed benefit period for unemployment allowance. The STEA, which was a quite ineffective program when
itwas first launched in 2005, turned out to be one ofthe most successful programs in 2009, when the impacts of
the crisiswere most intensely felt. In that year, the numberof applica-tions and the amount of total payments were
190.223peopleand TL 162.5 million, respectively.The Wage Guarantee FundThe most prominent of
the“passive”employment pro-grams is the “Wage Guarantee Fund (WGF)”. The WGF wasestablished in May 2008
with an annexed article toLaw No.4447. Its main purpose is to protect the entitlements of em-ployees insured
under the Unemployment Insurance Law No.4447 in the case of the employer’s insolvency or bankruptcy.Annexed
Article 1 of Law No. 4447 stipulates that in the eventthe employer declares bankruptcy, or receives a certificate
ofinsolvency due to bankruptcy or the postponement ofbank-ruptcy, the Fund shall cover up to three months’
unpaid wages.The beneficiary must have been employed for at least one yearcontinuously before the declaration
of bankruptcy.From August 2003, 1 per cent of the annual employers'contributions to the Unemployment
Insurance is transferred tothe WGF. As of 30 November 2011, total assets of the WGF,which operates under UIF, is
TL 148.201.292, after total ex-penses of TL 63.568.946 are deducted. Table 8 provides thenumber of beneficiaries
and the amount of paymentsin the2005-2011 period: n 2009, when the impacts of thecrisis were most intensely
felt, the number of applications tothe WGF increased to 12.371, and total payments reachednearly TL 22.4 million,
while in 2010, the number of applicantsand total payments became 12.905 and nearly TL 22million,respectively. In
2011, the number of applicants andpaymentsdecreased due to the realized economic growth.Perhaps the most
important legal arrangements introducedby Law No. 6111 is the provision that increases theamount ofresources
used forĐŞKUR’s service providing, and that allowsfor the use of up to 30% of UIF’s total premium revenues of
theprevious year for the purposes of improving the employabilityof labor force, taking and implementing measures
for increas-ing and sustaining employment. The said amount canbe in-creased by 50% by the Council Of Ministers
Decree.Thus,UIF’s utilization area was extended, which would allow for theuse of more resources in the fight
against unemployment. Ta-ble 9 below shows the UIF’s revenues and expenses as of 30June 2011. Net assets of
the Fund were nearly TL 49.4 billionin June2011. Total expenses exceeded TL 16 billion. However, merely25.8% (TL
4.1 billion) were distributed as insurance payments.A major portion of expenses (60%) was transferred to
thecentral budget for regional development purposes (for South-eastern Anatolia Project (GAP investments).
These transfersmade by ĐŞKUR to the central budget are worrisome in respectof the use of available resources in
the areas other than thosespecified in the law.During the crisis period,ĐŞKUR has assumed an active rolein the
fight against unemployment, and acted as theimple-menter of measures introduced via employment packages.
herewas asubstantial increase in the number of applicationsto ĐŞKUR inthe 2008-2009 period. This number
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decreased in 2010, albeitslightly. In 2010, with the alleviation of the effects of crisis, thenumber of people
presented to the employer and thenumberof those placed in jobs 2010 increased. While in 2009, thenumber of
people placed in jobs through ĐŞKUR was 118.278,this figure reached 205.231 in 2010. In 2008, the number
ofwomen placed in jobs by ĐŞKUR increased to 25.011,to29.453 in 2009, and to 49.696 in 2010. A significant
increasewas achieved in women employment especially in 2010com-pared to the previous year. Yet, though the
numberof womenapplicants in 2010 was 458.620, only 49.696 women could beplaced in jobs. As can be seen,
despite an upsurgein the num-ber of women placed in jobs, the rate of job displacement re-mained at the 10
percents level due to an upward trend in thenumber of women applicants.In 2010, the rate of job displacement of
disabled people2008 showed an increase compared to 2008. The saidin-crease mainly stemmed from the
incentives brought by em-ployment packages for enhancing employment opportunitiesboth for the abled and
disabled people.CONCLUSIONThe most devastating effects of the global crisisexperi-enced in 2008 and 2009 were
felt in labor markets.During thecrisis period, many countries attempted to sustainemploymentand to facilitate
access to employment, and to improve quali-ties and skills in line with the needs of labor market. However,in
Turkey, it was not admitted for a long time thatthe econom-ic crisis severely affected the country, and thus,in the
firstmonths, Turkey remained unresponsive against the crisis.Therefore, the unemployment rate, which was 10%
inthe pre-crisis period, climbed to 16% in a few months. Theemploy-ment losses of that period could have been
prevented by im-plementing ĐŞKUR-backed active labor policies in thesluggishindustrial sectors, and then an
increase in productivity could have been achieved. However, there was a delay in taking nec-essary measures. And
when anti-crisis measures began to beconsidered, this time it was faced with a shortageof resourcesin financing
such measures due to the decreased taxincomes.Turkey, realizing, albeit late, in the face of unemploymentrates
climbing higher and higher with every crisisand also bythe influence of the structural transformation thatthe
negativi-ties experienced in labor markets would not recoverspontane-ously, expanded the of active employment
policy. Acompre-hensive and anti-unemployment package that would becon-currently implemented was
announced in June 2009. In theframework of the new stimulus package, active laborpoliciesinvolving temporary
direct employment, vocational training,self-entrepreneurship and counseling programmes, apprentice-ship
programmes for youth, where participants are paid TL 15on daily basis, and the 6-month employer contribution
support.Besides, the adverse effects of the crisis tried tobe alleviatedvia passive labor policies, such as the
extension of the coverageof unemployment insurance, short-term employment allow-ance and the Wage
Guarantee Fund.In Turkey, the employment rates have reached theirpre-crisis level. Active labor policies have
contributed to the allevia-tion of the effects of the crisis. Yet, these policies should beclosely monitored, and the
measures introduced should beregularly revised and developed when needed. Otherwise, it willnot be surprising
to re-experience a situation, where official un-employment rates, which had used to linger in the 7%-8% in-terval,
became stable around 10% following the 2001crisis.Passive labor policies have important role in alleviating
theadverse effects of the unemployment problem. The phenome-non of unemployment that tends to increase
particularly intimes of economic crisis, and the accompanying problems ofpoverty and increased income inequality
demonstratethe im-portance of unemployment insurance. In Turkey, successfulimplementation of unemployment
insurance depends ontherational use of funds acquired. The UIF should not be seen bythe political authority as an
easily accessible resource for public financing, and should not be used for purposes other thanthose specified. The
unemployment insurance practice remainsinadequate due to its narrow coverage, low paymentrates andrigid
conditions for entitlement. The changes brought to theconditions for entitlement to unemployment insurance with
theeconomic crisis are not sufficient. The coverage ofunemploy-ment insurance should be extended, and the
conditions for en-titlement should be made more flexible.It is not possible to overcome the problems of
employmentand unemployment without resolving the problems such asgrowth, capacity utilization, investment
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and informal employ-ment. In addition, it important to ensure the participation andcooperation of social parties in
the formation of policies for al-leviating the effects of the crisis on the work life.