Snap15 March 2018Updated one year ago

Turkey: Unemployment rate keeps falling

The jobless rate in Turkey has continued to move lower with a further drop in the seasonally adjusted figure to 9.9% at the end of 2017. With one temporary exception in 2016, this is the lowest reading since mid-2014


December unemployment rate

(Seasonally adjusted)

The seasonally adjusted (SA) unemployment rate, which has been in a downtrend since the end of 2016, declined further in December and dipped into single-digit territory at 9.9%. That compares to 10.1% in the previous month and 12% (the highest rate since early 2010) a year before. The latest reading is the lowest since mid-2014 with the exception of a temporary single-digit figure in March 2016. The monthly improvement in December is, once again, attributable to continuing employment gains, with 137K (SA), while the labour force participation rate (SA) remained flat at an all-time high of 53.2%. The breakdown of the labour data reveals that the youth unemployment rate (SA) and non-agricultural employment (SA) have also dropped sharply.

The unadjusted unemployment rate stood at 10.4% showing a sharp decline from 12.7% in the same month of the previous year, thanks to 1.6mn new jobs generated in a year.

Unemployment vs Participation rate in SA terms

TurkStat, ING Bank
TurkStat, ING Bank

On a sequential basis, job creation in December was driven by industry (44K) and construction (44K) followed by agriculture (36K) and services (13K). In 2017, the acceleration in employment was attributable to services, recording a strong increase of 900K (with the exception of an unexpected contraction in July) while other sectors posted job gains in the range of 235K-250K.

Job creation by sectors

(SA, % YoY)

TurkStat, ING Bank
TurkStat, ING Bank

According to the Social Security Institution data for December, the number of compulsory-insured recorded a significant 7.9% YoY increase, showing a significant bounce after a relatively weak performance in 2016, while the change turned out to be slightly negative at -0.54% sequentially. Having strong seasonality, the construction and tourism sectors witnessed a decline in the number of insured, compared with modest gains in education and food sectors. On an annual basis, education stood out with the highest loss, while construction, tourism and trade-related activities have improved significantly.

Despite the uptrend in labour force (SA) participation throughout 2017 (by 80bp), employment has continued to improve thanks to hiring mobilisation efforts by the government, including significant employment incentives via cuts in social premiums in new hirings and other forms of tax incentives. This year, the government will keep supporting the labour market, especially in SMEs and the manufacturing sector focusing on female and youth employment, with the aim of generating another 1.5mn new jobs. New incentives to boost investments should further improve labour market conditions, in our view.