Considering the important events of the last week for the economy, two issues come to fore though not much exciting: The postponement of the negotiations in the National Assembly on the bill of law on the fiscal rule and the intensification of the signals that US economy as well as the EU will recover slower than expected. Moreover, data an important indicator was announced: Unemployment data for April. The essence of my comments on bill of law on fiscal rule was that 'it is an important step with certain important missing points'. And these missing points were about the transparency of budget accounts and about the 'on time' audits. I also talked about two notes, one by Emin Dedeoğlu and the other by Ümit Özlale which talked about how the fiscal rule should be ideally. These can be accessed at TEPAV's web site.

It is bad that the negotiations for the bill of law on fiscal rule were postponed. This gave way to speculations, for one thing. But I will see the glass half full: I hope that in this period, efforts would be made to work on these missing points. Maybe the mentioned notes by TEPAV would also be taken into account. This way to postponement serves for a good purpose. The performance of the EU and US economies in the period ahead will occupy the agenda for quite a long period. So, let us skip this for now and take a look at the unemployment rates for April. Graph 1 shows the movement of unemployment rate net of seasonality beginning from January 2005. The upper line shows the peak of unemployment rate: 14.8 percent in April 2009. And the lower line shows the lowest rate of unemployment over the concerned period: 9.8 percent in March 2007. There also is a horizontal line in the middle which shows the most recently announced rate of unemployment: 12 percent in April 2010.

Graph 1: Unemployment rate net of seasonality effect: January 2005 - April 2010 (%)
I believe the points made below are quite clear:

First one is favorable: over the last year unemployment rate dropped significantly. The second one, however, is unfavorable: Unemployment rate still varies at a level way above that before the crisis. There exists a difference of two points which is quite large. Let me also remind you that the lowest rate of unemployment before the 2008 crisis was above the level before the 2001, too.

With the rise in non-agricultural unemployment, the discouraged workers in these sectors move back to the agricultural sector. Although their entry to the agricultural sector does not increase the level of production, they seem to work in agricultural sector. Therefore, data on non-agricultural employment is more critical. Table 1 shows the change in general and non-agricultural unemployment compared to the same period in the year before. But this time the data is not net of seasonality effect; it is the original data announced.

The downward trend can also be observed for non-agricultural employment. However unemployment rate, which is 14.9 percent, is still 2.5 higher than that for April 2007 and 2008.

Table 1: Change in unemployment rate compared to the same period in the year before (points)

This commentary was published in Radikal daily on 18.07.2010