Productivity and long term growth
Going for Growth 2014: Turkey
Turkey has demonstrated good resilience during the financial and economic crisis though growth has been slowing more recently. Policy challenges include addressing infrastructure shortfalls, improving access to quality education, and achieving a better balance in social protection in order to foster job creation and employment in the formal sector.
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Previous Going for Growth recommendations include:
- Reduce the cost of employment of the low-skilled by limiting the growth of the relatively high minimum wage and by further lowering social security contributions.
- Improve quality and equity in education notably by granting schools and universities more autonomy and resources, in return for greater performance accountability.
- Reform employment protection legislation while expanding the scope and eligibility of unemployment insurance so as to boost employment in formal sectors.
- Improve competition in network industries and agriculture by speeding up the implementation of liberalisation of network industries and reforming agriculture support.
- Reduce incentives for early retirement by increasing the low statutory pensionable age and decreasing financial disincentives to continued formal sector work at older ages.
Actions Taken: Notable reforms in these areas over the past two years include:
- Increased provision of educational service: in 2012, the length of compulsory education was extended to 12 years.
The report also discusses the possible impact of structural reforms on other policy objectives (fiscal consolidation, rebalancing current account and reducing income inequality). In the case of Turkey, the increased provision of educational services can put pressures on the budget position, but may help reducing income inequality by enabling a more equitable accumulation of human capital.