Economic and Social Indicators of Turkey
ECONOMIC SITUATION OF TURKEY Today, Turkey is the sixteenth biggest economy in the world When the Turkish Republic was declared in 1923, there was and the sixth in the European Union with a GDP (PPP) of 960 almost no industry and no bourgeoisie. The state-directed billion US Dollars (IMF, 2010). Between 2002 and 2007, economy continued until after the Second World War. The Turkey’s economy grew at an average of 6%, which was one liberalisation process started after the 1950s especially with of the highest sustained growth rates in the world. Despite the emerging bourgeoisie who were the former big land own- the recession due to the global economic crisis, the country ers. However, import substitution policy remained in force until experienced 8.9% growth in GDP in 2010 (See Graph 1). In 1980. relation with overall GDP, per capita GDP has also dramatically After the 1979 foreign debt crisis, the Undersecretary of increased in the last decade. By 2010, it had risen to 10,000 the Prime Minister Turgut Özal, who was eventually to become USD from 4,130 USD in 2000. Prime Minister and then President, declared a stabilisation Turkey has also succeeded in attracting Foreign Direct In- and liberalisation programme on 24 January 1980. Following vestment (FDI) after long years of low levels of foreign invest- the coup d’état in September 1980, these measures which ment. Foreign Direct Investment rose to 22 billion US Dollars ended the import substitution strategy, established a free mar- in 2008 from about 1 billion in 2002. Despite the sharp drop ket economy in Turkey. Throughout the 1980s, an accelerated of FDI to 8.4 billion USD in 2009, the country increased the reform and adjustment process occurred in almost all sec- figure to 8.9 USD in 2010 (See Graph 2). Large privatisa- tors of the economic system. The reform process that started tion moves since the 1990s, political and economic stability, with liberalisation of the foreign trade regime and the financial robust growth rates and structural reforms in the banking sector concluded with the liberalisation of capital accounts in and finance sectors fostered this increase. Turkey has also 1989 (Central Bank of the Republic of Turkey, 2002). taken steps to develop its investment conditions by improve- Nevertheless, rising import rates raised the foreign exchange ments in administrative streamlining, putting an end to foreign input, on the one hand, while also bringing about a sharp rise investment screening, and strengthening intellectual property in prices inside the country, on the other hand (Eğilmez & legislation. On the other hand, there are still some problems Kumcu, 2007). Turkey experienced several economic crises in attracting foreign investors, for example high taxation and in the 1990s, these being identified with political and eco- continuing gaps in the intellectual property regime, which in- nomic instability, unsuccessful coalition governments and high hibit investment. Turkey has also a number of bilateral invest- inflation rates. The first crisis in 1994 has been named ‘the ment and tax treaties, which guarantee free repatriation of post-liberalisation crisis’ by Uygur (2010). The crises in Asia capital in convertible currencies and eliminate double taxation and Russia triggered a new crisis in 1998 and 1999. The (US Department of State, Bureau of European and Eurasian great earthquake of 1999 in north-western Turkey, where the Affairs, 2011). industrial centre of the country is located, also hit the Turk- Turkey itself is also an important investor in Central and ish economy. Finally, Turkey experienced two further crises in Eastern Europe. Russia, Bulgaria and Romania are among the late 2000 and February 2001. However, the Turkish economy countries receiving most Turkish investment. The construction made a strong recovery with structural reforms and new mon- and natural resources sectors are the leading areas of Turkish etary and fiscal policies after 2001 and, in relative terms, suc- investment abroad. ceeded in keeping out of the global crisis in 2008. In the last Turkey has improved the volume of its foreign trade signifi- decade, inflation and interest rates also fell dramatically. Most cantly over the last decade. Annual exports reached a figure of the structural reforms during the first decade of the 2000s of 114 billion USD in 2010 and are expected to rise to 117.5 took place as a part of an IMF program and EU Harmonisation billion USD in 2011 (See Graph 3). By 2010, Turkey’s largest Laws. These measures consist of structural reforms in the export volume was to Germany with annual exports amounting banking and finance sectors, the social security system and to 11.5 million USD. This is followed by England (7.2 million), tax system, and improvements in the investment environment. Italy (6.5 million), France (6.1 million), Iraq (6.0 million), Rus- Moreover, six zeros were dropped from the old Turkish Lira sian Federation (4.6 million), the US (3.8 million), Spain (3.6 and the new Turkish Lira was launched in 2005. million), UAE (3.4 million) and Iran (3.0 million) as the other
249 top ten countries on the list of Turkey’s exports in 2010. Fur- The maritime oil route from the Russian Federation and the thermore, annual exports in 2010 were recorded as reaching Caspian region to Europe crosses the Black Sea to reach the a figure of 185.5 billion USD and are expected to increase to Bosporus Strait. An average of 2.5 million barrels of oil per 196.5 billion USD in 2011 (See Graph 3). The Russian Feder- day reached Europe by way of this route in 2009. However, in ation has the biggest share in Turkey’s imports with 21.6 mil- recent years Moscow has been moving the maritime transport lion USD in 2010. The next nine countries on Turley’s imports of its crude oil exports through the Baltic ports.1 list for 2010 are Germany (17.5 million), China (17.2 million), In the case of oil transport by land over Turkish territory to the USA (12.3 million), Italy (10.2 million), France (8.2 mil- European markets, the Turkish Mediterranean port of Ceyhan lion), Iran (7.6 million), Spain (4.8 million), South Korea (4.7 in the south of the country is a transportation hub receiving oil million) and England (4.7 million). coming from Iraq and Azerbaijan. In the former case, the oil Although Turkey rapidly recovered after the global financial comes through the Kirkuk-Ceyhan pipeline with a capacity of
Country Profile: Turkey Profile: Country crisis, the current account deficit is relatively high. As seen 1.6 million barrels per day and, in the latter, it comes through above, most of Turkey’s biggest clients for its exports and the Baku-Tbilisi-Ceyhan pipeline with a capacity of 1.2 million sources of FDI are European countries. Thus, the recent eco- barrels per day.1 nomic turmoil in Europe can be said to one of the biggest Other projects in construction with a view to increasing Turk- factors which have increased the current account deficit. ish energy transportation capacity are the Samsun-Ceyhan Moreover, dependence on short-term financial investment also pipeline, which is to bring oil to Ceyhan from the Black Sea port makes the country’s economy sensitive to fluctuations in the of Samsum after crossing the Turkish peninsula from north to global economy (CIA, 2011). south, with a capacity of between one and 1.5 million barrels per day. Moreover, with a view to alternatives for moving gas CUSTOMS UNION WITH THE EUROPEAN over Turkish soil, an international agreement was signed in July UNION 2009 for the construction of the Nabucco gas pipeline span- The customs union between Turkey and the European Union ning some 3,000 km and with an annual capacity of 31,000 came into operation on 31 December 1995. It is based on million cubic metres of gas from Central Asia. The gas pipe- the 1963 Ankara Agreement between Turkey and the Euro- line is a joint initiative of Turkey, Romania, Bulgaria, Hungary pean Union. As one of the milestones in Turkey’s ongoing proc- and Austria that aims to offer an alternative route for the gas ess of accession to EU membership, the Customs Union is supply coming from the Russian Federation to Europe through one of the most significant developments affecting the Turkish Ukraine and Belarus. It is envisaged that the infrastructure will economy since the liberalisation measures were launched in be operative in 2015. 1980 (IGEME). Turkey’s oil reserves are estimated at approximately 270 mil- The main aim of the Customs Union is the free mobility of lion barrels. They are mainly, located in the southeast (Hakkari) industrial goods between the EU and Turkey without being sub- and northeast (Thrace) of the country. Turkish oil production ject to customs duties or quantitative restrictions. Despite its amounted to 53,000 barrels a day in 2009 while its refin- ambitious character, the Customs Union does not cover es- ing capacity is some 700,000 barrels a day.1 This production sential economic areas, such as agriculture, to which bilateral answers only 10% of the country’s needs and hence Turkey trade concessions apply, services or public procurement (Euro- must import 90% of the oil it needs for national consumption. pean Commission). With the Customs Union, Turkey has elimi- Ankara’s main oil suppliers are Iran, the Russian Federation nated all customs duties and quantitative restrictions applied and Saudi Arabia (see Table III). on imports of industrial products from the Community. Moreo- With respect to Turkey’s natural gas industry, it is estimated ver, Turkey started applying the rates of protection specified that there are reserves in Turkish territory of some 218.000 in the EU Customs Tariff for products imported into Turkey cubic feet with fourteen gas fields in operation, the main one from third countries. Following the coming into force of the being the Kuzey Marmara offshore field. Turkey’s main gas sup- Customs Union, the average of Turkey’s weighted rates of pro- pliers are the Russian Federation and Algeria (see Table III). tection through custom duties on industrial imports from the As for nuclear energy, Turkey has no nuclear power stations European Union and European Free Trade Association (EFTA) in operation, although it is true that, with the aim of diversifying countries dropped to zero from the figure of about 10% before energy resources and reducing the country’s dependence on the Customs Union. Furthermore, the average protection rate external supplies, the Turkish Ministry of Energy and Natural dropped from about 16% to 4.2% for products imported from Resources announced plans in February 2011 to construct as third countries (IGEME). many as twenty nuclear power stations throughout the country with a view to their being operational in 2030. ENERGY Turkey’s main energy indicators reveal a country that is very In its privileged position on the routes between the Russian dependent in energy terms, with a figure as high as 72% (see Federation, the Caspian zone, the Middle East and Europe, Table IV) and a very evenly balanced energy mix between coal, oil Turkey has become a lead player in gas and oil supplies. While and gas, this accounting in almost equal parts for the country’s it is true that the country has its own gas and oil industries, energy consumption. Outstanding in terms of production is coal, reserves in both cases are modest and Turkey’s importance in which represents 60% of the total energy production, followed the energy domain is due to its geostrategic situation, which by renewable energies (26%). With regard to imported energy, CIDOB International Yearbook 2011 Yearbook CIDOB International has given it a key role in European energy supply. oil (27%) and natural gas (38%) head the list (see Graph V).
250 Graph 1: GDP Growth Rate 2001-2010 (%)
15
10
5 01/I 01/II 01/III 01/IV 02/I 02/II 02/III 02/IV 03/I 03/II 03/III 03/IV 04/I 04/II 04/III 04/IV 05/I 05/II 05/III 05/IV 06/I 06/II 06/III 06/IV 07/I 07/II 07/III 07/IV 08/I 08/II 08/III 08/IV 09/I 09/II 09/III 09/IV 10/I 10/II 10/III 10/IV 0
-5
-10
-15 Source: TURKSTAT Produced by: CIDOB -20 Economic and Social Indicators of Turkey of and SocialEconomic Indicators Graph 2: Foreign Direct Investment in Turkey 2002-2010 (US Billion $)
25 Source: Central Bank of the Republic of Turkey Produced by: CIDOB 20
15
10
5
0 2002 2003 2004 2005 2006 2007 2008 2009 2010
Graph 3: Turkey’s Foreign Trade 2002-2010 (US Billion $)
250 Annual Import Annual Export 200 Source: TURKSTAT Produced by: CIDOB 150
100
50
0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
251 DEMOGRAPHY AND SOCIAL INDICATORS The biggest share in employment is in the services sector. In Demography particular, jobs in the tourism sector are increasing. In addition to its consistently high growth rate, the demo- As mentioned above, the number of unpaid family workers is graphic profile of Turkey is also one of the important factors significantly high in agriculture and many of these are women. which increase country’s significance in the international are- By definition, these women are not counted as unemployed. na. According to the official statistics of TURKSTAT, by the end Thus, labour force participation rates of women in urban ar- of 2010 Turkey’s population was 73,722,988 with an annual eas are low while non-agricultural unemployment rates among growth rate of 1.59%. It is expected to reach 85 million by women are relatively high. By January 2011, the labour force 2025. Life expectancy at birth was 74.3 in Turkey by 2010. It participation rate of women in urban areas was 19.5 %. The is 76.8 for females and 71.8 for males. non-agricultural unemployment rate was 19.4 % for women by Turkey has an average population density of 96 inhabitants comparison with 14.7% for men. Throughout Turkey’s urbani-
Country Profile: Turkey Profile: Country per km2. The most populated cities are Istanbul (13.3 mil- sation process, families left agricultural production and moved lion), Ankara (4.8 million) and Izmir (3.9) million. 76.3% of to cities, and women in these families were excluded from the the population lives in urban areas. Although the population is labour force due to their low levels of skills and education (Ada- concentrated in the industrialised western parts of the coun- man, et al., 2007). The positive relationship between educa- try, fertility rates and population growth are higher in the less- tion and the labour force participation rate shows the impor- developed eastern regions where the population is younger tance of education for the inclusion of women into the labour (See Table I). market (See Graph 5). Although the total fertility rate is 2.11 which is very close Education to standard replacement fertility level (2.1) and expected to The low levels of the labour force participation rate for wom- decrease in the coming years, Turkey has a young popula- en and other disadvantaged groups such as youth in general, tion. The average age was 29.22 by 2010. Turkey’s youthful or people living in less-developed regions highlights the need for population can be considered as one of the factors behind improvement in both enrolment levels and quality of education its economic growth. The country’s total dependency ratio is in Turkey. With this in mind, the compulsory basic education 48.89. What makes Turkey unique among its competitors age was increased from 5 to 8 years in 1997. Moreover, en- in its region or among the EU countries is its low old-age rolment levels have significantly increased in recent decades dependency ratio. This ratio, which is the ratio of elderly (See Table II). people above the age of 64 compared with the working age Inequality between men and women in terms of schooling population of between 15 and 64 years, is 10.76% in Tur- has been dealt with, especially with regard to primary school key. The figure is 31% in Germany as the most populated enrolment, through public campaigns. However, inequalities in country in the EU, 27% in Turkey’s neighbour Greece, 25% attaining higher levels of education still persist (See Graph 6). in Spain, 21% in Romania, as one of the newest countries in Moreover, there are also inequalities between regions. Enrol- the EU, and 25% in Croatia, which is another candidate for ment levels, especially after primary school, dramatically de- EU membership (WB). cline in less developed regions. Furthermore, despite the improvements in enrolment levels, Employment there are still problems pertaining to quality of education. Class Turkey’s youthful population offers a window of opportunity. sizes are above the average for the European Union and other Adaman et al. (2007) argue that Turkey has to increase its developed countries in the OECD (Adaman, et al., 2007). Yet, labour market participation and employment rates in order to total spending on education relative to GDP increased from benefit from this opportunity. However, unemployment rates 2.35% of GDP in 1995 to 3.82% in 2002 (Saygılı, Cihan, & are currently above 10% (11.9% by January 2011). During Yavan, 2006). the global crises in 2008 and 2009 the figure rose to 16.1%. Following the primary education reform in 1997, a meas- Employment rates are also low, especially for women. By Janu- ures aimed at improvement have been initiated in secondary ary 2011, the total employment rate was 42.3%, whereas it education. Curricula in various fields have been revised. Never- was 23.2% for women. Moreover, the unemployment rate is theless, despite significant improvements in average scores in higher for the young population. By January 2011, the youth reading, mathematics and science, Turkey ranked 32nd among unemployment rate (15-24 years) was 22%. These are the 34 OECD countries in the PISA 2009 tests, which measure main constraints operating against Turkey’s being able to use the basic skills of 15-year-old pupils in the participating coun- its population-based window of opportunity. tries (OECD, 2010). Another characteristic of the labour market is the high share of agriculture in total employment. By the end of 2009, the Health and Well-being share of agriculture in employment was 24 % (See Graph 4). According to TURKSTAT, by 2010, the life expectancy at This share is expected to decrease to 15% in less than twenty birth was 73.6 in Turkey. Crude birth rate is 6.3 per thousand years. Here, it should be underlined that the majority of people persons per year and the infant mortality rate is 13.2 per employed in the agriculture are self-employed and unpaid fam- thousand persons. Although Turkey has progressed a lot, for ily workers. Since unpaid family workers are not evaluated as instance the infant mortality rate was 85 per thousand per- unemployed, Turkey faces the challenge of tackling increasing sons in 1985; current numbers are still high compared with CIDOB International Yearbook 2011 Yearbook CIDOB International unemployment rates as the share of agriculture diminishes. the developed world.
252 TABLE I. MAIN TRADE PARTNERS OF TURKEY TABLE II. FOREIGN TRADE BY SECTORS 2010 (Million $) 2010 Country Export Import Total % Million $ Germany 11,486 17,549 29,035 9.7 EXPORTS Russian Fed. 4,631 21,599 26,230 8.8 Sector China 2,259 17,180 19,439 6.5 Agriculture and Forest 4,941 Italy 6,508 10,203 16,711 5.6 Fishery 156 USA 3,770 12,318 16,088 5.4 Mining 2,677 France 6,055 8,176 14,231 4.8 Manufactures 105,518 United Kingdom 7,238 4,680 11,918 4.0 Others 639 Iran 3,043 7,644 10,687 3.6 TOTAL 113,931 Spain 3,563 4,840 8,403 2.8 IMPORTS Iraq 6,041 1,354 7,395 2.5 Sector South Korea 304 4,764 5,068 1.7 Capital goods 28,820 United Arab Intermediate goods 131,393 3,337 698 4,035 1.3 Emirates Consumption goods 24,734 TOTAL TOP-12 58,235 111,005 169,240 56.5 Others 546 TOTAL 114,000 185,541 299,541 100.0 TOTAL 185,493
Source: Turkstat Produced by: CIDOB Source: Turkstat Produced by: CIDOB Economic and Social Indicators of Turkey of and SocialEconomic Indicators GRAPH IV: EVOLUTION OF TRADE BETWEEN TURKEY AND THE EU 1991-2010 (Million $)
80 Imports from EU-27 Countries Exports to EU-27 Countries 70
60 Source: Turkstat Produced By: Cidob 50
40 Customs Union Turkey-EU
30
20
10
0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
TABLE III. MAIN ENERGY TABLE IV. MAIN ENERGY SUPLIERS OF TURKEY 2008 INDICATORS OF TURKEY 2008 Country Crude Oil (Thousand Toe) % Iran 7.6 35.0 Energy Dependency (%) 72.2 Russian Federation 6.8 31.3 Saudi Arabia 3.3 15.2 Kazahstan 0.8 3.7 Energy Intensity (kep/thousand €) 257.40 Sirya 0.5 2.3 Total top-5 19.0 87.6 Energy Production (Thousand Toe) 29.0 TOTAL 21.7 100.0 Country Gas (TJ) % Energy Consumtion (Thousand Toe) 100.3 Russian Federation 880,128 61.8 Ageria 158,994 11.2 Energy Imports (Thousand Toe) 79.8 Nigeria 38,993 2.7 Total top-3 1,078,115 75.7 Energy Exports (Thousand Toe) 6.9 TOTAL 1,424,072 100.0
Source: Eurostat Produced by: CIDOB Source: Eurostat Produced by: CIDOB
253 GRAPH V. TURKEY'S ENERGY CONSUMTION, PRODUCTION AND IMPORTS BY SOURCE 2008 (thousand toe)
29.5 31.2 30.1 9.3 CONSUMPTION 29.4% 31.1% 30.0% 9.3% Total: 100.3
16.6 2.1 0.8 7.7 PRODUCTION 57.2% 7.2% 2.8% 26.6% Total: 29 Country Profile: Turkey Profile: Country IMPORT 12.7 21.9 30.6 14.4 0.06 15.9% 27.4% 38.3% 18.0% 0.1% Total: 79.8
0% 25% 50% 75% 100% Hard coal Crude oil Natural Gas Renewables Petroleum products Electricity *Turkey exported a total of 6.9 Mtoe in 2008 Source: Eurostat. Produced by: CIDOB
TablE V. Population of Turkey by region Graph VI. Economic Activity by Sectors 2008 2008 (thousand toe) Region Population % Istanbul 13,255,685 18 West Marmara 3,164,048 4.3 Services Aegean 9,693,594 13.1 East Marmara 6,841,607 9.3 49% West Anatolia 7,018,194 9.5 Construction 6% Mediterranean 9,423,231 12.8 Central Anatolia 3,849,267 5.2 West Black Sea 4,518,786 6.1 East Black Sea 2,516,167 3.4 Industry 21% North East Anatolia 2,202,106 3 Central East Anatolia 3,647,531 4.9 South East Anatolia 7,592,772 10.3 Agriculture 24% TOTAL 73,722,988 100.0 Source: TURKSTAT Source: Turkstat Produced by: CIDOB Produced by: CIDOB
GRAPH VII. Labour Force Participation Rate and Educational Status (%)
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90 Men Women 80 Total 70
60
50
40
30
20 Source: TURKSTAT 10 Produced by: CIDOB
0 Illiterate Less than High School Vocational Higher CIDOB International Yearbook 2011 Yearbook CIDOB International High School High School Education
254 TablE VI. Net Schooling Ratios for Selected Years 1994-2010 (%)
PRIMARY JUNIOR HIGH SCHOOL HIGH SCHOOL HIGHER EDUCATION Total Male Female Total Male Female Total Male Female Total Male Female 1994-1995 89.34 91.29 87.28 53.43 61.89 44.57 36.74 42.35 30.89 8.61 9.82 7.35 HIGHER EDUCATION PRIMARY HIGH SCHOOL SUPERIOR Total Male Female Total Male Female Total Male Female 1999-2000 93.54 98.41 88.45 40.38 44.05 36.52 11.62 12.68 10.52 2004-2005 89.66 92.58 86.63 54.87 59.05 50.51 16.60 18.03 15.10 2009-2010 98.17 98.47 97.84 64.95 67.55 62.21 30.42 31.24 29.55
Source: Turkstat Produced by: CIDOB
GRAPH VIII: Sex ratio by educational year and level of education 1997-2009 (%)
120 Economic and Social Indicators of Turkey of and SocialEconomic Indicators
100
80
60
40 Primary Education Source: TURKSTAT 20 Secondary Education Produced by: CIDOB Higher Education 0 1997 1998 1998 1999 1999 1900 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009
TablE VII. Income distribution by quintiles (%) 2006 2007 2008 2009 First 20% 5.1 5.8 5.8 5.6 Second 20% 9.9 10.6 10.4 10.3 Third 20% 14.8 15.2 15.2 15.1 Forth 20% 21.9 21.5 21.9 21.5 Fifth 20% 48.4 46.9 46.7 47.6
Source: Turkstat Produced by: CIDOB
TablE VIII. Poverty rates of individuals according to poverty line methods (Rate of poor individuals %) Methods 2002 2003 2004 2005 2006 2007 2008 2009 Food poverty 1.35 1.29 1.29 0.87 0.74 0.48 0.54 0.48 Complete poverty (food+nonfood) 26.96 28.12 25.60 20.50 17.81 17.79 17.11 18.08 Below 1 $ per capita per day (1) 0.20 0.01 0.02 0.01 - - - - Below 2,15 $ per capita per day (1) 3.04 2.39 2.49 1.55 1.41 0.52 0.47 0.22 Below 4,3 $ per capita per day (1) 30.30 23.75 20.89 16.36 13.33 8.41 6.83 4.35 Relative poverty based on expenditure (2) 14.74 15.51 14.18 16.16 14.50 14.70 15.06 15.12
1 Here, 618 281 TL, 732 480 TL, 780 121 TL, 0.830 TRY, 0.921 TRY, 0.926 TRY, 0.983 TRY and 0,917 TL which are the equivalents of 1 $ purchasing power parity (PPP), are used for 2002, 2003, 2004, 2005, 2006, 2007, 2008 and 2009 respectively. 2 Based on 50% of equivalised median consumption expenditure. Source: Turkstat Produced by: CIDOB
255 OECD data indicate that total expenditure on health was Although extreme poverty, which is the percentage of the popu- 2.4% of GDP in 1980. It rose to 6.2% by 2008. However, lation living on less than 1 USD per day, is below 0.5 % in Turkey, this is still below the average for developed countries. For in- almost 19% of the population is poor in terms of expenditure for stance, by 2007 in Greece, it was 9.7%. In Turkey by 2007, food and non-food consumption (UNDP, 2011) (See Table IV). there were 911 public and 365 private hospitals with a total Buğra and Keyder (2003) argue that the character of poverty number of 184,983 beds. The number of people per doctor has been changing in Turkey, arguing that the “new poverty”, was 886 in 1996 and 637 by 2006. According to TURKSTAT which is long-term and not easily mitigated by access to tradi- 73% of health expenditure was provided from the public do- tional support networks of family and friends, is increasing. main in 2008 and 17.4% was provided by households. Age and household consumption are the main determinants of The social security system in Turkey has been undergoing poverty in Turkey. Children and families with children are more great transformation since 2007. The social security and pen- prone to poverty (World Bank, 2005). In their analysis on pover-
Country Profile: Turkey Profile: Country sions systems were formerly run by three distinct organisa- ty in Turkey between 2003 and 2006, Aran et al. (2010) found tions for workers, civil servants and the self-employed. Start- that poverty in rural areas is increasing. The poverty headcount ing from 1 January 2007 these three institutions were unified rate is highest for the people employed in agriculture. Agricul- under the Social Security Institution. This reform was in fact tural workers with children living in crowded families and the part of a greater restructuring called the “Transformation of least educated groups are caught in the poverty trap. Health” which began in 2003. The aim was to strengthen the A low level of education is also closely associated with poverty. role of the Ministry of Health in the provision of health care, in- An increase in the household head’s educational attainment from troducing universal health insurance, restructuring delivery of illiteracy to having basic education results in a 39% increase in health services, and developing human resources in the health per capita consumption in urban areas (Aran, Demir, Sarıca, & care industry along with a national health information system. Yazıcı, 2010). The health care reform also aimed at universal health insur- As mentioned above, children are also more prone to poverty. ance implemented through a referral system with the family One in four children under the age of 14 lives in poverty in Tur- physician (Adaman, et al., 2007). However, many citizens are key, and they constitute 40% of all the poor in the country (Aran, unable to enter the insurance system and are still not covered Demir, Sarıca, & Yazıcı, 2010). by any social security. This is because informal economy is very Regional differences are also high in terms of poverty. Eastern large in Turkey. According to Adaman et al. (2007) more than parts of the country in particular are less prosperous than the half of all employment is in the informal sector due to high pay- rest of the country. Less advantageous levels of natural and roll taxes, as well as problems with severance payments and human resources, sectoral structure and differences in produc- restrictions on temporary work and, in part, weak rule of law. tivity across sectors, and the high share of agriculture in em- In the case of housing, one of the most important dimen- ployment are some of the reasons for regional disparities. The sions of social well-being, Turkey also scores badly compared poorer cities are those with the lowest capital to land and land with European countries. The squatter housing problem, which to labour ratios, and with least access to public infrastructure started with the rural to urban migration of the 1950s, still re- (World Bank, 2000) mains. The big municipalities and cities are introducing urban transformation projects in squatter areas, demolishing houses where mostly poor rural migrants live. Apartment houses are built in their place and sold to the middle and upper middle Note classes. Regarding the quality of the housing, according to the Quality of Life Survey conducted by the European Foundation 1. See http://www.eia.gov/countries/cab.cfm?fips=TU for the Improvement of Living and Working Conditions, Turkey
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