Major trends in labor market

I ended my earlier article and”Monetary policy in EU progress reportand” by stating and”we will soon witness the second round of interest rate fighting.and”
The second round has already begun with insistent calls by Recep Tayyip Erdogan, the president of the republic, for the central bank to radically cut interest rates. The expected next step would have been nominating the deputy prime minister in charge of economic affairs in the new government. However, the announcement of the new government has been postponed to Monday.
According to rumors, there is a profound divergence between Prime Minister Ahmet Davutoilu and Erdogan on this issue. Davutoilu would like to nominate Ali Babacan, a tireless defender of the current monetary policy, but Erdogan opposes this choice and prefers his son-in-law Berat Albayrak, who is ready to impose on the central bank management the interest rate policy passionately defended by the president. So, letand’s wait until Monday to come back to the second round of the fight that is likely to have striking effects on the economy.
The other notable event of the week was the monthly publication of the labor market statistics concerning the August period (the average of July, August and September). Once again, the usual confusion over interpreting change in the unemployment trend was observed as the Turkish Statistics Institute (TurkStat) highlights seasonally unadjusted figures with the adjusted ones. The unadjusted unemployment rates show a sizable increase compared to the July period (the average of June, July and August), from 9.8 percent to 10.1 for the overall rate and from 12 percent to 12.5 percent for the non-farming rate. Nevertheless, this increase does not reflect the reality since it incorporates the seasonal change in Turkish economic activity.
Various opponents of course prefer to comment on this apparent increase in unemployment, but the figures that should be considered in order to scrutinize what is really happening in the labor market are obviously the seasonally adjusted ones. According to these figures, the general unemployment rate as well as the non-farming rate stagnated at 10.4 percent and 12.5 percent, respectively. It is worth noting that following a strong increase in unemployment from April to June, we observe stagnation for three periods. The other aspect of unemployment that has to be underlined is the fact that this rather good news conceals an unhealthy background. Indeed, seasonally adjusted employment fell by 71,000 from July to August. If unemployment did not increase, this was because of a higher decrease in the labor force, which reached 81,000. Let me point out this twin decrease is not very frequent it has occurred only twice in the last three years. Let me also add that industrial employment fell continuously in the last three periods net job losses reached 152,000 in this sector. So we have to be cautious when commenting on a decline in unemployment.
To have a deeper understanding on the dynamics of the local labor market one must look also at other indicators, like unemployment in subgroups, participation rates, etc. As TurkStat does not make seasonal adjustments for most of these indicators, we have to use annual changes excluding seasonality in order to avoid misinterpretations. First, letand’s note that in August 2014 as well in August 2015 the overall unemployment rate stood at 10.1 percent. However, we observe a slight decrease in the male unemployment rate from 8.9 to 8.8 percent while female unemployment increased from 12.7 percent to 13.1 percent. Let me add that except for women from technical high schools, unemployment increased for all other education levels. This unpleasant development for women can be explained mainly by the large increase in the female labor force observed in the last few years. The overall labor force rose from 51.2 percent to 52.1 percent within a year. The increase in the female labor force from 30.9 percent to 32.1 percent played a major role in this strong increase. This is of course good news since female employment is also increasing, although not sufficiently. The last point to be noted in this regard is that the female labor force increased across all education levels except for those with a university degree the female labor force in this subgroup declined from 71.2 percent to 69.7 percent.

SOURCE: TODAY’S ZAMAN

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