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Turkey: Going for Growth 2019 priorities

Improve educational achievement at all levels. Student enrolment rates are increasing at all levels, but there is ample scope to improve quality and equity.

• Actions taken: Starting from the education year 2017-18, an Orientation Programme is implemented to prevent absenteeism and class repetition in all types of schools, and a Quality Monitoring and Evaluation System is applied in all vocational and technical schools.

• Recommendations: Continue to reduce the wide quality gaps persisting among schools, school types and universities, by granting them more autonomy and resources per student, against greater performance accountability. Further develop pre-school education. Continue to strengthen vocational education in co-operation with the business sector and evaluate the outcomes of the many recent initiatives in this area.

Reduce the cost of employment of the low skilled. High minimum costs of labour for formal employers discourage the hiring of the low skilled in the formal sector.

• Actions taken: The real minimum wage was increased by 0.2% in 2017 and 3.0% in 2018 – more than average labour productivity growth in the latest year, potentially discouraging formal employment. Nominal increases amounted to 8% and 14.2% respectively. Amid very high inflation in 2018, the minimum wage increases for 2019 are not yet settled. Between January 2018 and December 2020, the employment cost of all unemployed workers that a firm hires in addition to its employment level at the end of the previous calendar year will be subsidised by 37 to 50% for a year.

• Recommendations: Keep the growth of the real official minimum wage below average productivity gains for a while. Allow regional differentiation of minimum wages through local consultations between government, employer and employee representatives. Grant permanent social contribution cuts for low-skilled workers in the entire country, financing them by widening the tax base.

Reform employment protection legislation and strengthen active labour market policies. Existing employment protection rules for permanent and temporary workers nurture a large informal sector.

• Actions taken: No action taken. Background studies for the introduction of “portable severance saving accounts” have been discussed with social partners in a Tripartite Advisory Board. No consensus was reached on their financing and the reform has been postponed.

• Recommendations: Implement the labour market reforms programmed in various government documents. Replace the severance payment regime (available only for a minority of formal sector workers). Liberalise fixed-term contracts. Make public support for retraining and job search more reliable for those out-of-work.

Improve competition in network industries and agriculture. Obstacles to competition in network sectors and in agricultural markets undermine productivity growth.

• Actions taken: A “Regulation on the Organisation of the Natural Gas Wholesale Market and Procedures and Principles for Market Usage” was adopted in 2017. As a result, a wholesale market for natural gas started to operate in September 2018.

• Recommendations: Identify the remaining obstacles to the opening of network sectors to competition, with the help of an OECD Competition Assessment Review. Delink agricultural support from production and shift its composition away from price measures towards direct support.

1Improve environmental performance. Strong economic and population growth, rapid urbanisation and expansion of coal power production are increasing environmental pressures, in particular air pollution, carbon emissions and water scarcity.

• Recommendations: Integrate environmental protection into economic plans and raise awareness of environmental challenges. Increase the scope and level of carbon pricing. Commit the necessary financial and human resources to the implementation of key environmental policies.