Treasury borrowing aggravates Turkey’s interest rate woes (Al-Monitor, June 28, 2017)
Summary Ankara’s pressure on banks to lower interest rates has taken a menacing tone, but…
Mustafa Sönmez – Hürriyet Daily News July/14/2014
Turkish Statistical Institute (TÜİK) released the employment-unemployment data of 2013 according to provinces. However, the unemployment rates given for each 81 provinces have again been presented without making the distinction between agricultural and non-agricultural. Actually, especially the unemployment rates should be given after making this distinction because agriculture has a feature that hides unemployment. Especially in those places in Anatolia where agrarian population is dominant, when this separation is not done, then the real unemployment is being hidden.
Let us look at this example: The general unemployment rate given by TÜİK for Ağrı province and its vicinity is six-seven percent. In other words, it looks as if they have an unemployment problem that is two points below the country average; whereas the non-agricultural unemployment in the same region is above 15 percent.
In other words, with this method, unemployment of 8 points is being hidden. The unemployment in Van and its vicinity which is camouflaged this way reached about seven points. For Malatya and its vicinity, this figure is six points; for Trabzon, Erzurum, Kars, Samsun, Hatay, Kırıkkale and vicinities, we can talk about a camouflaged unemployment of around five points.
As expected, those provinces that suffer the most from unemployment in 2013 are southeastern provinces: Batman, Şırnak, Siirt, Mardin and Diyarbakır… In these provinces unemployment rates that reach 20 percent are in question. The ruling Justice and Development Party (AKP) government claims ever since that it has increased welfare in this region through investments. As the most significant example, they point out to the energy and irrigation investment package of Southeast Anatolia Project (GAP).
However, the energy leg of the project in question has been completed. The construction of irrigation canals is continuing but there exists unemployment of up to 20 percent. As for years, the security issues in the region have caused the evacuation from rural areas and emigration to urban areas. There is no employment present for the masses that have flocked to the cities. The public sector cannot create adequate employment and the private sector lacks the savings and the appetite for investment. Anybody who has some savings takes his capital and hits the road for western cities; thus urban unemployment grows and grows.
It is relatively easy to understand the unchanging fate of the southeast region but is the unemployment in big cities in dimensions to be underestimated? For example, what is happening to Turkey’s third big city İzmir? This city’s unemployment has exceeded 15 percent and going on to 16 percent. İzmir is the unemployment champion of metropolises.
The unemployment of İzmir had peaked during the 2009 crisis caused by the global crisis and exceeded 16 percent. However, in the following growth years, the city was not able to recover and in 2013, this rate was determined to be 15.4 percent in İzmir.
However; Istanbul, the construction driven metropolis, the center of growth with domestic consumption, does not experience unemployment like İzmir. In 2009, unemployment peaked going up to nearly 17 percent, but did not stay there; it went down until 2013 to become 11.2 percent.
This is the same with Turkey’s general non-agriculture unemployment rate of 11 percent. In İzmir though, unemployment is four points above country average. When looking at Ankara, also this city is not experiencing what İzmir has to go through.
Ankara’s unemployment is around 10 percent; actually one point below Turkey’s average. Even though they are not as much as in Istanbul, the ongoing construction investments in Ankara, the increasing public employment and public investments absorb the unemployment in the capital city.
Why so high?
When we come to why unemployment is increasing in İzmir… First, İzmir is a center that still draws migration. For all around Turkey and from other Aegean provinces, people migrate to İzmir and the workforce supply is increasing. On the other hand, there is not adequate production and investment.
First of all, public investments are inadequate. The Justice and Development Party (AKP) cannot somehow warm up to the democrat-secular İzmir; it has not been able to win any election in this city. İzmir, which contributes 7 percent to the country’s national income and more than 10 percent to the state budget, cannot even receive 5 percent of public expenditure. Residents of İzmir argue that they have been treated like a step child.
The second factor is that the AKP’s growth model focuses on construction and domestic consumption; and Istanbul and its vicinity is becoming a center that investors flock to with the urban gain increasing each passing year.
This alienates İzmir and the entire Anatolia because these places are “industrialist-producers” containing diversity from agriculture to industry to intermediate goods, to investment goods industry. The hot money that flows in place of foreign direct investment is in Istanbul… The finance capital and the quick-profit-seeking capital are in Istanbul. This situation causes İzmir to go back each year. İzmir is actually resisting these demoting policies but it is not able to do anything to the unemployment of 15 percent.
What İzmir is suffering is actually being experienced in other big cities in Anatolia. Just look at Adana and Mersin. The unemployment is at 13 percent.
Once upon a time Adana was called Ada(SA); it was the birthplace and area of investment of one of the major capital groups, the Sabancı family. With the Sabancı family shifting to finance and energy, the industry in Adana went back. The traditional migration center of the southeast, the Çukurova also went back in agriculture. The Kurdish population who came to Çukurova with the hope of finding jobs migrated further on to western provinces in pursuit of bread. Çukurova stopped being a migration center; on the contrary, its population started leaving.
In Kayseri and Kocaeli, two provinces trying to cling on to industry, and in Bursa, the non-agricultural unemployment is above Turkey’s average, reaching 12-13 percent.
The unemployment crisis of the masses who have flocked to the big cities with many hopes will not ease unless industry is developed, especially the industry that is capable of exporting, that would create employment and unless such a paradigm change is introduced. Then, it will be a true nightmare to manage the big cities.