Turkish jobless rate falls as laid-off are rehired

The unemployment rate in Turkey declined to 11.5 percent in February, according to data announced Monday by TurkStat, the statistics office. The figure represents an improvement of 2.9 percentage points compared to February 2010, when the rate was at 14.4 percent.

The government’s April budget has meanwhile produced a surplus of 1.1 billion Turkish Liras, but some economists have warned that there is more to the data than a cursory glance would suggest.

Compared to January, the February jobless data represents an improvement of 0.4 percentage points.

"As seasonal factors start to kick in positively, we may see the unemployment rate falling to around 10 percent in the second quarter and to single-digit levels in the third quarter," said Banu Kıvcı Tokalı, the deputy general manager of Destek Securities. "The scope of recovery in the jobs market will be determined by the effectiveness of measures taken to limit domestic demand."

Tokalı said a "moderate" slowdown in the pace of economic growth could make single-digit unemployment possible.

İş Investment economists, led by Burcu Ünüvar, focused on the other side of the coin. "Most of the jobs created in the past 12 months involve the rehiring of laid-off workers during the crisis," they said in a note to investors Monday. "As capacity utilization rises to pre-crisis levels, those laid off before will be reemployed."

Turkey’s employment outlook is not only about job data, they also said, noting that 41 percent of those employed lack social security, while the labor-force participation rate for women stands at only 27 percent. "Seventy-two percent of the new jobs created are for males," the economists said.

Bad news on inflation?

Özgür Altuğ, the chief economist at BGC Partners, said the jobs recovery could add to inflationary pressures. "From the Central Bank’s point of view, the figure should be a sign that the positive contribution of a weak labor market to disinflation efforts will be much lower from now on," Altuğ said.

In another development, the government’s April budget produced a surplus of 1.1 billion liras, compared to a deficit of 4.5 billion liras a year earlier. The improvement rested on a decline in interest payments and growing tax revenue, according to the Finance Ministry.

Excluding interest payments on debt, the surplus was 3.9 billion liras, compared with a surplus of 2.6 billion liras a year earlier. The cumulative surplus excluding interest in the first four months was 13.7 billion liras, or 99 percent of the goal for the entire year.

Tax revenue rose an annual 26 percent in April to 19.3 billion liras. Overall spending fell 11 percent. Non-interest spending rose 8.3 percent, while expenditure on interest fell 60 percent.

The performance is driven by a fast economic growth that reached 8.9 percent in 2010. Analyzing the data, Tevfik Aksoy, a chief economist at Morgan Stanley, told Bloomberg that the figures support the Central Bank’s efforts to restrain inflation and the current-account deficit.

Ahmet İncekara, an economy professor at Istanbul University, also said the figures indicate a recovery in public finances.

"Last year’s budget deficit was normal, due to accommodative fiscal policies and high spending. The situation has now begun to recover," İncekara told the Hürriyet Daily News. "When the income expected from tax restructuring is registered, a much better public finance outlook will be revealed. This is a good situation both for domestic and foreign investors."


/Hurriyet Daily News/