REGIONAL EFFECTS OF THE MINIMUM WAGE INCREASE

Seyfettin Gürsel, Gökçe Uysal and  Melike Kökkızıl

This research brief aims to estimate the possible effects of a relatively high increase in minimum wages to wage distribution. The 2013 micro dataset of Household Labor Survey was used in the analysis. The earning data indicates that, by November of 2015, 57.3 percent of formal, full-time wage-earners working in private sector, i.e. more than half of the wage-earners in Turkey are receiving a monthly salary less than expected net minimum wage. When the regional disparities in the labor market are considered, the wage shock is expected to increase average wages moderately in certain regions (high-wage regions) and significantly in the others. When the minimum wage increases to 1300 TL, the regional median wages are expected to rise to 1300 TL, except in Istanbul and Ankara. In other words, we expect a considerable increase in the wages and this increase to have an effect on more than half of formal and full-time wage-earners working in private sector. No doubt that in Turkey, which has low rates of labor force participation, the minimum wage hike will encourage participation in the labor force. On the other hand, increases in labor costs following the minimum wage hike will also strengthen firms’ incentives to create informal employment.

doc. ResearchBrief189

pdf. ResearchBrief189

 

Economic Outlook & Forecasts: November 2015

MODERATE GROWTH IN THIRD QUARTER

Seyfettin Gürsel, Mine Durmaz and Melike Kökkızıl

We revise up our economic growth forecast for the third quarter compared to second quarter from 0.6 percent, which was mostly based on leading indicators of July and August, to 0.7 per cent considering the new data of September. Seasonally adjusted Industrial Production Index (IPI) remained stable in September compared to its previous month. In the third quarter, IPI has increased by 1.2 percent compared to its previous quarter. At the same period, export volume index increased by 3.3 percent and import volume index decreased by 1.2 percent. So, the contribution of net exports to the growth is expected to be  significantly positive.

The current account surplus in September was $95 million. 12-month rolling current account deficit decreased from $44.3 billion to $40.5 billion. We predict the current account deficit to GDP ratio to be 5.5 percent in third quarter and the gold-excluded ratio to be 5.6 percent.

doc. EconomicOutlook2015M11

pdf. EconomicOutlook2015M11

Economic Outlook & Forecasts: October 2015

MODERATE GROWTH IN THIRD QUARTER

Seyfettin Gürsel, Mine Durmaz and Melike Kökkızıl

Our first economic growth forecast of last month related to third quarter compared to second quarter and mostly based on leading indicators of July, was 0.1 percent. Due to favorable changes in industrial production and net exports in August compared to July, we revise up our forecast for the third quarter. We increase our quarter on quarter (QoQ) growth forecast from 0.1 percent to 0.6 percent. Industrial Production Index (IPI) declined by 1.5 percent in July compared to June and it increased by 2.9 percent in August compared to July. Likewise, the contribution of net exports to the growth was expected to be negative in July due to 0.3-percent drop in exports and 2.1-percent increase in imports volume indexes. Then, it turned out to be significantly positive in August due to 0.6-percent increase in exports and 3.1-percent fall in imports volume indexes. We calculate that the corresponding year on year growth forecast as 4.5 percent due to the base effect and cumulative high growth rate during the last three quarters.

The current account deficit in August was $163 million. 12-month rolling current account deficit decreased from $45 billion to $43 billion. We predict the current account deficit to GDP ratio to be 5.7 percent in third quarter and the gold-excluded ratio to be 5.7 percent.

doc. EconomicOutlook2015M10

pdf. EconomicOutlook2015M10

Economic Outlook & Forecasts: September 2015

SHARP SLOWDOWN IN THE THIRD QUARTER

Seyfettin Gürsel, Mine Durmaz and Melike Kökkızıl

According to Turkstat seasonally and calendar adjusted gross domestic product increased by 1.3 percent in the second quarter of 2015. Considering mostly unfavorable leading indicators of July, we forecast 0.1 percent economic growth in the third quarter comparing to second quarter. Industrial Production Index (IPI) declined by 1.5 percent from the previous month. Export volume index decreased by 0.3 percent, and the import volume index increased by 2.2 percent. We calculate the corresponding year on year growth as 3.9 percent given cumulative high growth rates during the last three quarters.

The current account deficit in July was $3.2 billion. 12-month rolling current account deficit increased from 44.2 billion to $45.0 billion. We expect the current account deficit to GDP ratio to rise from 5.7 percent in the second quarter to 6.1 percent in the third quarter, and the gold-excluded current account deficit to be 6.1 percent.

doc. EconomicOutlook2015M09

pdf. EconomicOutlook2015M09

Labor Market Outlook: October 2015

NONAGRICULTURAL UNEMPLOYMENT DECREASED IN JULY 2015

Seyfettin Gürsel, Gökçe Uysal and Mine Durmaz

Seasonally adjusted labor market data shows that, compared to the previous period, nonagricultural unemployment rate increased from 12.6 percent to 12.4 percent (0.2 percentage points) in the period of July 2015. Employment decreased by 44 thousand in manufacturing while employment increased by 53 thousand and 74 thousand in construction and services respectively. Betam’s forecasting model predicts that seasonally adjusted nonagricultural unemployment rate will increase in next period.

doc. LaborOutlook2015M10

pdf. LaborOutlook2015M10

Labor Market Outlook: September 2015

STRONG INCREASE IN UNEMPLOYMENT

Seyfettin Gürsel, Gökçe Uysal and Mine Durmaz

Seasonally adjusted labor market data shows that, compared to the previous period, nonagricultural unemployment rate increased from 12.3 percent to 12.6 percent (0.3 percentage points) in the period of June 2015. Thus, seasonally adjusted nonagricultural unemployment rate raised by 0.6 percentage points during last two periods. In the period of June 2015, employment decreased by 14 thousand in construction while employment increased by 37 thousand and 24 thousand in services and manufacturing respectively. Betam’s forecasting model predicts that the increase in seasonally adjusted nonagricultural unemployment rate will taper off, in other words, seasonally adjusted unemployment would remain at this level.

doc. IsgucuGorunum2015M09

pdf. IsgucuGorunum2015M09

Labor Market Outlook: August 2015

NONAGRICULTURAL UNEMPLOYMENT STARTS TO INCREASE

Seyfettin Gürsel, Gökçe Uysal and Mine Durmaz

Seasonally adjusted labor market data shows that, compared to the previous period, nonagricultural unemployment rate decreased from 12.0 percent to 12.3 percent (0.3 percentage points) in the period of May 2015. Seasonally adjusted monthly data shows a 90-thousand increase in nonagricultural employment. The increase in labor force reached 184 thousand, thus the number of unemployed increased by 94 thousand. While employment in construction decreased by 37 thousand in this period, employment in services and construction increased by 78 thousand and 50 thousand respectively. Betam’s forecasting model predicts that seasonally adjusted nonagricultural unemployment will continue to increase. Given that the June 2015 elections will be repeated in November 2015 and that the political environment is not suitable for structural reforms, the firms will be hesitant towards job creation. We expect the unemployment to increase in the upcoming periods.

doc. LaborOutlook2015M08

pdf. LaborOutlook2015M08

 

Labor Market Outlook: July 2015

DECLINE IN UNEMPLOYMENT CONTINUES

Seyfettin Gürsel, Mine Durmaz and Melike Kökkızıl

Seasonally adjusted labor market data shows that, compared to the previous period, nonagricultural unemployment rate decreased from 12.1 percent to 11.9 percent (0.2 percentage points) in the period of April 2015. The reason behind the decline in unemployment is the employment increases in manufacturing and services sectors which exceed the increases in the labor force. In addition, non-agricultural unemployment continues to stay at high levels.

doc. LaborOutlook2015M07

pdf. LaborOutlook2015M07

 

Labor Market Outlook: June 2015

LABOR FORCE AND EMPLOYMENT ARE DECLINING

Seyfettin Gürsel, Gökçe Uysal and Melike Kökkızıl

Seasonally adjusted labor market data shows that nonagricultural unemployment rate decreased from 12.2 percent to 12.1 percent (0.1 percentage point) in the period of March 2015 compared to the previous period. The decline in unemployment rate is caused by a faster decline in the non-agricultural labor force relative to previous period. Compared to February 2015, non-agricultural labor force and employment decreased by 73 thousand and 40 thousand, respectively. The reason of decline in employment is job losses in manufacturing and services sectors. This is the first job loss in the service sector since 2012.

doc. LaborOutlook2015M06

pdf. LaborOutlook2015M06

 

Labor Market Outlook: May 2015

SLOW DECREASE IN NONAGRICULTURAL UNEMPLOYMENT CONTINUES

Seyfettin Gürsel, Gökçe Uysal and Melike Kökkızıl

Seasonally adjusted labor market data shows that nonagricultural unemployment rate decreased from 12.3 percent to 12.2 percent (0.1 percentage points) in the period of February 2015 compared to the previous period. Nonagricultural labor force and employment increased by 58 thousand and 75 thousand, respectively. The increase in nonagricultural employment stems from a 118 thousand monthly increase in services employment. In this period, increase in manufacturing employment has been limited to 2 thousand and employment in the construction sector declined by 45 thousand.

doc. LaborOutlook2015M05

pdf. LaborOutlook2015M05

 

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