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Jobs-Diagnostic-Turkey.Pdf Public Disclosure Authorized Public Disclosure Authorized DIAGNOSTIC Public Disclosure Authorized TURKEY Public Disclosure Authorized Page 1 of 114 © 2019 International Bank for Reconstruction and Development / The World Bank. 1818 H Street NW, Washington, DC 20433, USA. Telephone: 202-473-1000; Internet: www.worldbank.org. Some rights reserved This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) http://creativecommons.org/licenses/by/3.0/igo. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions: Attribution—Please cite the work as follows: Aysenur Acar and Ximena Del Carpio. 2019. “Turkey Jobs Diagnostic” World Bank, Washington, DC. License: Creative Commons Attribution CC BY 3.0 IGO. Translations—If you create a translation of this work, please add the following disclaimer along with the attribution: This translation was not created by The World Bank and should not be considered an official World Bank translation. The World Bank shall not be liable for any content or error in this translation. Adaptations—If you create an adaptation of this work, please add the following disclaimer along with the attribution: This is an adaptation of an original work by The World Bank. Views and opinions expressed in the adaptation are the sole responsibility of the author or authors of the adaptation and are not endorsed by The World Bank. Third-party content—The World Bank does not necessarily own each component of the content contained within the work. The World Bank therefore does not warrant that the use of any third-party-owned individual component or part contained in the work will not infringe on the rights of those third parties. The risk of claims resulting from such infringement rests solely with you. If you wish to re-use a component of the work, it is your responsibility to determine whether permission is needed for that re-use and to obtain permission from the copyright owner. Examples of components can include, but are not limited to, tables, figures, or images. All queries on rights and licenses should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: [email protected]. Images: © World Bank Tajikistan. Further permission required for reuse. Page 2 of 114 ACKNOWLEDGMENTS The report was prepared by Aysenur Acar Erdogan and Ximena V. Del Carpio. The team is grateful to the following colleagues for their excellent contributions: Reyes Aterido, Laurent Loic Yves Bossavie, Mattia Makovec, Efsan Nas Ozen, Habib Rab, Adrian Scutaru, Sirma Demir Seker, Pinar Yasar, [add after review meeting]. The team is grateful to the Government of Turkey more broadly for supporting this work. Numerous colleagues from the Ministry of Family, Labor and Social Security, the Ministry of Industry and Technology, World Bank, development partners, private sector, and the broad academic community supported the team in conceiving this study. The team received general guidance from Cem Mete (Practice Manager; Social Protection and Jobs). The team is grateful for the excellent advice provided by the peer reviewers Achim Daniel Schmillen, Metin Nebiler and Pinar Yasar. The team also thanks Gozde Yilmazturk and Derya Barlak for providing excellent administrative support. The report has been edited by Graham Colin-Jones. Page 3 of 114 CONTENTS EXECUTIVE SUMMARY ............................................................................................. 10 Economic Growth and Jobs ...................................................................................... 10 Workforce ............................................................................................................... 11 Recommendations to facilitate job creation in Turkey ................................................ 13 INTRODUCTION ....................................................................................................... 15 1. ECONOMIC GROWTH AND JOBS ....................................................................... 16 2. WORKFORCE ..................................................................................................... 24 Demographics, Labor Force Participation and Unemployment ................................... 24 Employment and Job Types ..................................................................................... 28 Profile of the workers ............................................................................................... 31 Inactivity ................................................................................................................. 36 Education, Skills and Labor Market Outcomes .......................................................... 40 Labor force skills as measured by PIAAC, PISA, and TIMSS ....................................... 44 Technological change and skill composition in the labor market ................................. 46 Labor market returns ............................................................................................... 51 Workforce skills in relation to job creation and productivity growth ............................. 54 Job quality............................................................................................................... 56 3. LABOR DEMAND IN THE FORMAL SECTOR ...................................................... 61 Profile of formal sector labor demand ........................................................................ 61 The relationship between productivity and employment ............................................. 71 Firm perceptions of obstacles to performance ............................................................ 76 1. Informal competition and informality ............................................................... 76 2. Excessive labor regulation ............................................................................... 77 3. Inadequately educated and skilled workforce .................................................... 79 4. RECOMMENDATIONS TO FACILITATE JOB CREATION IN TURKEY ................. 80 1. Details of actions recommended ...................................................................... 84 APPENDIX ............................................................................................................... 102 BIBLIOGRAPHY........................................................................................................ 113 Page 4 of 114 ABBREVIATIONS EIS Entrepreneurship Information System EU European Union FDI Foreign Direct Investment GDP Gross Domestic Product GII Global Innovation Index GNI Gross National Income ICT Information and Communications Technology JQI Job Quality Index LFP Labor Force Participation LFS Labor Force Survey NEET Not in Education, Employment, or Training OECD Organization for Economic Co-operation and Development PIAAC Programme for the International Assessment of Adult Competencies PISA Programme for International Student Assessment PPP Purchasing Power Parity SME Small and Medium-sized Enterprise SuTP Syrian under Temporary Protection TFP Total Factor Productivity TIMMS Trends in International Mathematics and Science Study TUIK Agency of Statistics under the Republic of Turkey UN United Nations WB World Bank WDI World Development Indicators Page 5 of 114 LIST OF FIGURES Figure 1 Turkey’s GDP per capita (PPP), 1990-2017 ................................................................................ 16 Figure 2 Real GDP annual growth, 2000-2017 ........................................................................................... 16 Figure 3 Poverty rate in Turkey, 2002-2016................................................................................................. 17 Figure 4 Key labor market indicators, compound annual growth rate, 2005-2017 ............................... 17 Figure 5 Export, FDI and Remittances, 2005-2017 ................................................................................... 18 Figure 6 GDP and employment growth, 2005-2017 .................................................................................. 19 Figure 7 Employment-GDP elasticities, quarterly, 2005 Q1- 2018 Q2 ................................................... 19 Figure 8 Total employment and net increase in employment by sector .................................................. 20 Figure 9 Shapley decomposition of per capita value-added growth ......................................................... 20 Figure 10 Employment and value added by major sector, 2005-2017 ..................................................... 22 Figure 11
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