Active labour market policies

Background

Turkey is undergoing a restructuring process that is characterized by sectoral shifts, privatisation, public sector reform and post-crisis economic adjustment, all of which are likely to displace large numbers of workers. In addition, the expectation of a renewed economic crisis due to the ongoing war in neighbouring Iraq aggravates the problems already existing in the labour market, such as low and declining labour force participation, high levels of unemployment, especially youth unemployment, labour shedding, large informal sector, high underemployment, lack of qualified human capital, skill mismatch and lack of social dialogue. Moreover, the institutional framework of employment and social protection in Turkey has been weak, although a job security law and an unemployment insurance scheme have recently been introduced. A new law defining the role and the capacity of the Turkish Employment Organization (ISKUR), the only public agency delivering employment services in Turkey, is also currently under consideration.

Justification

In dealing with privatisation or recession-induced redundancy, Turkey has mainly relied on passive labour market policies of income replacement such as early retirement and severance payments (recently also unemployment insurance), commonly used to protect the unemployed and the laid-off workers without increasing their employability. The active measures linking income replacement with active reintegration and reallocation policies, on the other hand, have not been given due attention.

As clearly documented in the aforementioned EMP/ANALYSIS study on ALMP for restructuring in Turkey, there is ample scope for active policies in the context of the Turkish labour market given the costliness of the passive policies on the one hand and the low employment rates on the other. ALMPs encompass measures to increase the quality of the labour supply (training and retraining), measures to raise the demand for labour (microenterprise development and self-employment support, wage subsidies, public works and public service employment) and measures to improve the matching of demand and supply (job search assistance and employment services). The background study pointed to the need to complement passive policies with such active measures and particularly emphasized the significance of using new combination of measures, using new implementation agents and structures, formulating a better matching process between candidates and measures and promoting more involvement of the social partners at both national, regional and local levels in the process of policy design. The study argued for a community-led approach for redeployment of retrenched workers, which ought to be reinforced by improved public employment services. In this context, two important elements were identified as matching displaced workers and labour market measures through 'profiling' of both the unemployed and the vacancies in order to better allocate people to programs and increasing training take-up by raising the efficiency and appropriateness of training and by providing better job consultancy.

Against this background, there is a need for this pilot project on an experimental scale to explore the most appropriate policy mix and implementation structure for Turkey and the most efficient restructuring and functioning of ISKUR as the public employment agency to carry out the important components of the national employment policy. Indeed, the new ISKUR law foresees some thorough restructuring of ISKUR and an increase in its role in the national employment policy by implementing more ALMPs.

The project site has been selected as Kocaeli (Izmit) in consultation with ISKUR for the following reasons:
• The number of registered unemployed is high (18,493);
• The number of unemployed receiving unemployment benefits is high (1,318);
• Labour mobilisation is high;
• The province suffered deeply from the earthquake of 1999 and is still trying to recover from the employment consequences of this disaster, as well as of the economic crisis of 2001;
• It is a dynamic and highly industrialised city;
• There is high migration to this province from the neighbouring or surrounding provinces and from the South-East Anatolia region;
• The number of staff of ISKUR in Kocaeli is above average (20);
• There are three large state-owned enterprises that are scheduled to be privatised in the course of 2003 (PETKIM in petrochemical industry, TUPRAS in petroleum refining and SEKA in paper industry).

Although the on-site work will be carried out by Turkish experts under the authority of ISKUR, there are areas that need the assistance of the ILO within the framework of the cooperation between ILO and Turkey. As a follow-up of the first phase of this cooperation, the ILO, as a tripartite organization, will draw on its experience in using tripartite governance structures to bring solutions to labour market problems and will:
• Act as a facilitator in the issue of social dialogue by selecting, bringing together and providing the common ground for social dialogue with national, regional and local actors with a view to creating a social network that can be drawn upon to decrease unemployment and to increase employment;
• Offer advice on the range of policies that ISKUR can put in place;
• Set up training modules for ISKUR officials in restructuring, redundancy management and job counselling.

Objective of the Project

The overall aim of this project is to improve the employment services in the province of Kocaeli to be a model for the rest of the country by employing ALMPs pre-determined through a labour market needs analysis of the province and by involving all social partners in order to decrease the level of unemployment caused by economic crises and restructuring including privatisation. Target groups are registered unemployed persons in Kocaeli. Specific objectives of the project are:
• Increasing the effectiveness of social dialogue through Local Employment Committees;
• Carrying out labour market needs analyses as an input into the decisions to be taken about appropriate labour market policies in the province;
• Evaluating alternative ALMPs, including the Training for Self-Employment offered by ISKUR, and providing recommendations for policies at the level of the province based on ILO expertise and experience in restructuring situations (e.g. SIYB – Start and Improve Your Business Program – of the ILO);
• Setting up and delivering training for ISKUR officials (15 persons) to achieve better rates of redeployment of displaced workers by improving the match between unemployed persons and open vacancies and by encouraging cooperation with (local) social partners during this process;
• Monitoring and evaluation of the results.

Expected Outcome Upon Completion of the Project

• The approach of close cooperation and partnership with local social constituents so as to offer more efficient employment services will have been adopted by employment service providers via training of 15 ISKUR officials.
• Effective decisions regarding labour market policies will have been reached by the Local Employment Committee based on labour market needs analysis.
• Local social partners will have enhanced their awareness that ALMPs accompanying restructuring bring about positive results indicated by the number of meetings and partnerships between local constituents.
• ISKUR/Kocaeli will have improved public employment services to better manage the redundancies and restructuring by:
  1. Determining the appropriate labour market policies to diminish unemployment in the target group;
  2. Increasing the rate of utilization of ALMPs by the unemployed; and
  3. Raising job placement rates.

Outputs

Output 1: Organisation of a workshop for the introduction of the pilot and brainstorming with all social partners in Kocaeli

Output 2: Analysis of labour market needs at the level of the province

Output 3: Training of ISKUR officials

Output 4: Established infrastructure in Kocaeli for the unemployed persons in the target group to benefit from ALMPs

Project Partners

The project will be coordinated by ILO/Ankara and ILO/HQ and executed by ISKUR. The first step will be to identify, inform and bring together the most important local, regional and national actors in order to identify the needs in terms of accompanying measures for workers’ displacement, including an inventory of measures they have and new measures that could be proposed based on other country experiences (OECD and transition countries). According to the needs identified and ALMPs to be implemented to meet them, training programs for ISKUR officials will be designed in collaboration with ILO Training Centre in Turin. The effects of improved employment services on the number of unemployed and on the period of unemployment will subsequently be monitored and evaluated.

Sustainability

The ILO will help to set up the project, but in the future this will be a self-sustained process by ISKUR and the Turkish government. The ultimate sustainability of the project will depend on the results of the evaluation of the pilot. If successful, the project could be operationalised throughout Turkey and in other similar developing countries.

Inputs

• ISKUR will provide in-kind contribution such as office space, transportation etc.
• ILO/Ankara will provide the funding for training as well as for missions, seminars, workshops, translations, invited experts etc. through cash surplus funds earmarked for this purpose
• ILO/HQ (EMP/ANALYSIS) will provide approximately 4 person-months at professional level