2016 ECONOMIC REFORM AGENDA January 2016 Introduction On December - PowerPoint PPT Presentation

2016 ECONOMIC REFORM AGENDA January 2016

Introduction On December 10, 2015, Prime Minister Ahmet DAVUTOĞLU announced the structural reform agenda to be completed in a year within the framework of Turkey’s strong, sustainable and inclusive growth objectives. Main objectives of the structural reform agenda are as follows:  Reaching a high income level with strong and sustainable growth  ‘Inclusive Growth’ which will enable all parts of the society to benefit from the strong and sustainable growth 2

I – Reaching a high income level with strong and sustainable growth 3

GDP Per Capita – Current Situation High Income Threshold 14,000 ($12,735) 12,000 10,000 8,000 6,000 Upper Middle Income Threshold ($4,125) 4,000 Lower Middle Income Threshold 2,000 ($1,045) 0 GDP Per Capita (USD, The Atlas Method)* Source: World Bank Current Situation: Turkey aims to exceed the high income per capita threshold level of $12,735 and reach high income level. 4

Increasing the Total Factor Productivity for Strong and Sustainable Growth  Development and utilization of the labor potential  Improving the quality of education  Increasing skills and quality employment in labor market  Decreasing youth unemployment rate  Increasing female labor force participation rate  Increasing labor market flexibility  Enhancing the investment environment and financing  Promoting the use of domestic savings in investment financing  Improving the investment environment  Promoting value-added production structure  Encouraging entrepreneurship 5

‘‘Education is a prerequisite to enhance labor productivity. Besides education, enhancing the skills and promoting entrepreneurship are also crucial. To this end, education and labor productivity are given particular importance in the 2016 Economic Reform Agenda. 6

Education – Current Situation Net Schooling Ratios (%) 110 99.6 94.5 91.0 91.0 90 76.7 70 50.6 50 39.9 30 14.7 10 Primary School Junior High School Secondary Education Higher Education 2002/2003 2013/2014 Source: TURKSTAT Current Situation: There has been a significant increase in the education level during the last 12 years. In order to improve the labor productivity, further dissemination of 7 education and improvement of the education quality are important.

Quality of Education – Current Situation Turkey – OECD Comparison (PISA Score, difference) 80 76 74 70 60 50 46 45 38 40 30 21 20 10 0 Science Math Reading 2006 2012 Source: OECD Current Situation: Turkey has made significant progress in education quality according to OECD’s PISA research. Approximately 30 points of improvement has been achieved in all three categories relative to the OECD average. It is important to accelerate this positive 8 tendency in the upcoming periods.

Unemployment Rates by Education Level – Current Situation 20 (%, 2014) 15.6 16 12.3 11.2 12 9.5 9.4 7.6 7.3 8 6.9 4.8 4 0 lisealtı yükseköğrenim lise ve dengi 25-29 30-34 35+ 25-29 30-34 35+ 25-29 30-34 35+ Less than High-School High-School Equivalent Higher Education Source: TURKSTAT, Treasury Calculations Current Situation: As the level of education increases, unemployment ratios decrease more rapidly in the older-age group and remain low. While the level and quality of education are important, increasing the skills of the labor force is also necessary. In this framework, improving youth skills and adding this potential to the economy are particularly important. 9

Youth Unemployment – Current Situation 60 (%, 2014) 50 40 30 EU-28 (Youth Unemployment Rate, average, %) 20 10 0 Spain Greece Crotia Italy Portugal Slovakia France Romania Ireland Poland Bulgaria Belgium Sweden Luxemburg Finland Hungary Slovenia Latvia Lithuania Turkey UK Czech Rep. Estonia Netherlands Denmark Malta Austria Iceland Norway Germany Source: Eurostat Youth Unemployment Rate Unemployment Rate Current situation: Youth unemployment rate is a common phenomena across all countries and considerably higher than the headline. While youth unemployment rate in Turkey is still lower than the EU-28 average, it is 8 percentage points higher than the headline 10 unemployment rate.

Female Labor Force Participation Rate – Current Situation Female Labor Force Participation Rate (%) Turkey 32 30 28 90 (%, 2014) 26 80 24 70 22 OECD (average) 20 60 2007 2008 2009 2010 2011 2012 2013 Source: TURKSTAT 50 40 30 20 Iceland Sweden Switzerland Norway Denmark Canada New Zealand Netherlands Finland Germany UK Latvia Estonia Austria Australia Portugal Spain Israel Russia France Slovenia USA Japan Czech Rep. Luxemburg Belgium Colombia Slovakia Ireland Poland Hungary Greece S. Korea Chile Italky S. Africa Mexico Turkey 2014 Turkey 2002 Source: OECD Current situation: Although female labor force participation has significantly increased in recent years, it is still lower than the OECD average. The added value that women produce by participating in labor force will help us unleash the potential of Turkish 11 economy.

0 1 2 3 4 5 6 Turkey rigidity. Current Situation: Among OECD countries, Turkey has the highest level of labor market Source: OECD Luxemburg (Index scale between 0-6 from least restrictive to France Restrictiveness on Part -Time Workers, 2013 Chile Estonia Norway Spain Belgium Greece Korea Labor Market Rigidity – Current Situation Mexico Italy most) Portugal Slovenia Poland Slovakia Finland Czech Republic Denmark Austria Hungary Germany OECD (Average)) Switzerland New Zealand Netherlands Australia Japan Sweden Iceland 10 15 20 25 0 5 Source: World Bank (Average number of weeks of salary for workers with 1 year, 5 years Turkey Israel Malaysia Mexico China Greece Spain Saudi Arabia Czech Republic Germany and 10 years of tenure) India Ireland Severance Pay Portugal Brazil Australia Russia Poland Uzbekistan Hungary Slovakia Slovenia South Africa Canada France Estonia Luxembourg Ukraine United Kingdom 12 Austria Belgium Denmark Finland

Increasing the Quality of Education – 2016 Economic Reform Agenda  A Teachers’ Academy will be established (An:129, D: 1 year). Teacher candidates, teachers and school directors will be trained in the light of the latest developments.  Education faculties will be restructured (An: 43, D: 6 months).  The curriculum at all levels of education will be updated so as to include basic skills, and an effective counselling and guidance system will be established. (An: 130, D: 1 year).  Necessary measures will be taken for foreign language education to provide students with better written and verbal communication skills (An: 132, D: 1 year).  A new ‘Higher Education Law’ which focuses on quality and autonomy will be prepared (An: 41, D: 6 months).  ‘Higher Education Quality Council’ will be established (An: 42, D: 6 months).  National Education Quality Framework will be introduced at all levels of education and Education Quality Index will be prepared in this context (An: 131, D: 1 year). 13 An: Action Number, D: Duration

Improving the Skills of the Labor Force and Increasing Qualified Employment I – 2016 Economic Reform Agenda  The skills of the labor force will be improved.  A monitoring and evaluation system will be established for the Active Labor Market Programs (An: 54, D: 6 months).  The infrastructure for apprenticeship training will be strengthened (An: 136, D: 6 months).  The incompatibility between the programs in vocational college diplomas of graduates and their job specification will be abolished (An: 40, D: 6 months). The connection between education and employment will be reinforced. (An: 137, D: 1 year). The administration model of vocational and technical education schools will be upgraded (An: 134, D: 1year). The vocational schools will be restructured (An: 135, D: 1 year). Hence, the connection between education and employment will be strengthened through improving vocational and technical educational schools.  Educational support will be provided to vocational and technical private secondary schools established out of the Organized Industrial Zones (An: 45, D: 6 months). An: Action Number, D: Duration 14

Improving the Skills of the Labor Force and Increasing Qualified Employment II – 2016 Economic Reform Agenda  The qualified employment in labor market will be increased  Skilled nonresident labor force will be encouraged to work in Turkey (An: 89, D: 6 months).  Employment of foreign experts for research projects will be facilitated (An: 90, S: 6 months).  Work on the special “Turquoise Card System” will be finalized (An: 88, D: 6 months). Hence, the work permit process for skilled labor force will be accelerated. 15 An: Action Number, D: Duration