Turkey: Summary of Labor Market and Skills Issues

In the medium and longer term, Turkey faces challenges as it competes with other emerging economies. The inability to productively employ its human capital remains Turkey’s Achilles heel. Other emerging economies, including Malaysia, Korea and Brazil are making significant investments in education and skills.

If the country’s skills and labour market issues are not addressed, Turkey risks not having the right resources to enable it to compete with its peers and make the transition to the next stage of economic development.

Turkey’s economy grew by an impressive 8.8 percent in 2011. This is faster than economies such as India (6.8 percent), Russia (4.3 percent) and Brazil (2.9 percent). Turkey also has higher per capita GDP compared with the BRICs. Certain sectors such as automotive, textile and telecoms have seen significant investment, as companies try to take advantage of a large domestic market.

Turkey M&A activity in Turkey has also increased as the country undergoes privatisation programmes in sectors such as power and energy. In addition, Turkey’s strategic position, at the cross-roads between Europe, Asia and the Middle East, mean it has both cost-related and geopolitical advantages.

Yet, Turkey has some skills and labour market issues and each of these issues is a big obstacle for Turkey to boost its productivity.

This document gives an overview of Turkey’s labour markets and skills issues—and therefore points to areas that, if tackled, could boost Turkey’s global competitiveness.

In general, the following are the problems that Turkey faces in terms of labor and skills:

1. The economic structure is changing but labour supply is lagging
   
   
2. Informal employment limits growth of enterprise
   
   
3. There is a young dynamic population but youth unemployment is high
   
   
4. Women’s role in the workplace is complex
   
   
5. There are systemic education issues, across many levels
   
   
6. Scaling up levels of on-the-job training and lifelong learning would boost competitiveness
   
   
7. Entrepreneurship is surging but is still held back by skills shortages