* Unemployment stubbornly high despite fast growth
* Poverty gap remains wide
* Women particularly vulnerable
* Policies mitigate impact, may not address root causes
* Disparity may become political challenge to government
By Seltem Iyigun
ISTANBUL, Nov 28 Near the shores of the
Bosphorus, a few minutes' drive from a bay of million-dollar
homes and swaying yachts, Jimmy Choo and Prada vie for the
affections of the Istanbul elite inside the glass rotunda of
The sprawling shopping mall is an emblem of Turkey's
economic boom, a success story that defies the commercial gloom
across much of Europe.
But behind the complex, with its valet parking and chic
boutiques, there's a slum housing rural Turks who have swarmed
to this city of 14 million in search of jobs which, despite fast
economic growth, are hard to come by.
The disparity is fuelling "alienation and
disenfranchisement" in the poorest parts of the country, says
Sinan Ulgen of the Istanbul-based Centre for Economic and
Foreign Policy Studies. Inequality also deepens the fissures in
society over issues such as Turkey's developing democracy, human
rights and religion.
Through a decade of almost uninterrupted expansion, in which
Turkey has established its economic and diplomatic clout as a
Muslim democracy bridging Europe and the Middle East, the gap
between rich and poor has barely budged.
In 2011, when Turkey had the fastest growing economy in
Europe, enjoying an expansion of 8.5 percent, the richest 20
percent of Turkey's 74 million people accounted for almost half
of national income. The poorest 20 percent had just 6 percent.
Turkey ranks third highest among 34 countries in the
Organisation for Economic Cooperation and Development on a scale
of income inequality. This is despite average annual economic
growth of 3.5 percent between 2007 and 2011, driven by strong
consumer demand and construction activity.
Analysts blame Turkey's inequality, in part, on a lopsided
tax system that draws two-thirds of its revenue from indirect
taxes such as an 18 percent sales tax on most goods and
services, rather than direct levies such as income tax, which
can be designed so that wealthier people pay higher rates. The
sales tax itself seems distorted; the rate for clothing and
caviar is 8 percent, and zero for some precious stones.
Other factors are the limited rights of trade unions, and
barriers to women seeking work in a traditional Muslim society.
Also, Turkey's unemployment rate remains stubbornly high at
between 8 and 9 percent.
WOMEN MOST VULNERABLE
"The social state is missing in Turkey. The highest amount
of taxes is collected from the middle and lower classes," said
Turkish economist Mustafa Sonmez. He also cited draconian
legislation limiting union activity that dates from a military
coup in 1980.
"For the equal distribution of income you need strong labour
unions, but this right has been scaled back since Sept. 12,
1980," Sonmez said. "Workers don't have a say in income
In October 2011, 16 percent of the population was classified
as living below the poverty line, with an income of 3,120 lira
($1,745) per month for a family of four.
Women are particularly vulnerable in a society where many
are not encouraged to work or seek higher education. Just 30
percent of Turkish women and slightly over 40 percent of Turks
aged 15-24 are employed or actively looking for work.
"You really need to be qualified," said 23-year-old Umran
Zeynep Yildiz, who graduated from a vocational lyceum five years
ago but says she has given up on finding a job.
"For people like me, it has become very difficult to find a
job since most people nowadays have university degrees."
Since she is no longer looking for work, Yildiz does not
figure in the official unemployment statistics. Nor do 13
Critics say the government has largely focused on social
programmes to mitigate the effects of unemployment and cut the
costs to businesses of employing people in the worst-affected
areas of the country, rather than tackling the root causes of
Early this year the government unveiled a national
employment strategy, including vocational training programmes
and incentives for businesses to hire more workers and provide
training. In some cases the government provides money for wages
and social security payments for six months.
While such programmes certainly help, they do not solve the
problem of creating enough jobs in a young and fast-growing
population, the critics say. Turkey's annual population growth
averaged 1.3 percent between 2004 and 2010, according to the
World Bank, compared to 0.3 percent for Europe and Central Asia.
Most jobs are created in the financial capital Istanbul, the
administrative capital Ankara and other urban centres. Some
rural areas are left behind, notably southeastern Turkey, where
poverty is helping feed a decades-long insurgency by Kurdish
militants of the Kurdistan Workers Party.
The government, led since 2002 by the Islamist-rooted AK
Party, defends its record. It points to the fact that the
unemployment rate is down from a peak of 14 percent in 2009, at
the height of the global financial crisis.
"Turkey is the only country that reduced unemployment in the
period after the global crisis, through incentives and
legislation t o invest in the education of the labour force and
the reduction of labour costs to employers," said Muammer
Coskun, director of the Turkish Employment Service, an offshoot
of the Ministry of Labour and Social Security which serves as an
intermediary between employers and job seekers.
According to the ministry, the government has employed some
2,700 professionals as work advisors to match job seekers with
companies looking to hire. The government says it is aiming for
5 percent unemployment by 2023.
Nevertheless, social inequality is striking under a ruling
party which draws much of its support from the poorer, socially
conservative Anatolian heartland. Since coming to power it has
presided over the growth of a nouveau riche class, including
tycoons and entrepreneurs with close links to the government.
For now, the AK Party may escape any serious political
backlash from the inequality issue. It comfortably won the last
parliamentary elections in June 2011; the poorest people are
often religiously conservative and therefore unlikely to rebel
against an Islamist-rooted government.
But critics say Turkey's inequality could become a political
problem for the AK Party in future, if the government does not
invest more in education, agriculture and labour-intensive
industry to aid poorer regions, and encourage women to enter the
workforce. Recent opinion polls suggest public support for the
AK Party may have dropped below 50 percent.
"The strategic force of Turkey is its young labour force,"
said Faik Oztrak, in charge of economic policy at the main
opposition Republican People's Party.
"If the hope of the young to reach the desired living
standard gradually fades...Turkey may face serious social