Last Thursday I have watched the entire meeting of Union of Chambers and Commodity Exchanges of Turkey (TOBB) with executive branches of chambers and commodity exchanges.  To be honest, the impression I got was quite different from what the newspaper captions implied. 80 percent of the chambers said yes to the suggestion of H.E. Prime Minister of Turkey. But let us analyze what exactly those 'yes's imply.

Turkey's most important problem is unemployment. So, at the point we arrived, is there no sustainable economic effort to make or a measure to take apart from begging for rapid recovery? If there is no concrete alternative measure to take, then there is no other option to address the issue in terms of social solidarity given the intensification of despair. Possible steps to take can only be one-time efforts, but a solution will most likely be reached at least before the elections. I believe that the suggestion of H.E. Prime Minister of Turkey reading "each enterprise should generate employment for one extra person" should be assessed in this context. And I argue that at the heart of this suggestion lies absence of any options and a sincere despair. However, Turkey can take concrete steps to tackle unemployment. Let this alone, taking a step is a must.  Turkey has to readdress the active-passive balance in labor market policies. The government has a room to maneuver wider than assumed concerning the fight against unemployment. When the results of the electronic survey conducted in the meeting in Ankara last Thursday called by TOBB are examined carefully, it will be understood that the business world also underlines this point. The way out lies in vocational training; but let us see how.

Please let me begin with the active-passive balance in labor market policies term: Public policies aiming at the labor market can be divided into two: active labor market policies and passive labor market policies. The latter does not intend to change the qualification of labor force; it takes the qualification of labor force for granted. It focuses on changing the burden on those to be employed. It provides assistance for the unemployed. In this respect, a series of labor market policies that are currently implemented, from unemployment insurance payments to the cut of employer's insurance premium by 5 points are in the scope of passive labor market policies. The main feature of active employment policies is that it improves the qualifications of human capital and eliminates the recruitment costs of employers. Here the intervention is channeled directly to the qualifications of the labor force. The main policy instrument in this category is vocational training courses.

The recent rise in unemployment in Turkey resulted certainly from a conjuncture-specific development. It is impossible to argue that the global economic crisis had no role in this increase. However when figures are examined the structural dimension of Turkey's unemployment becomes evident. Those who lost their jobs are middle aged and poorly educated. Let us skip the 2001 crisis and focus on the 2002-2009 period. Over the mentioned period number of unemployed increased by 41 percent (1 million and 7 thousand people). Number of unemployed in the 34-54 age group and received secondary school education at most increased by 57 percent. As the Table below also suggests, 30 percent of the total rise in unemployment stems from this group. Middle-aged and poorly educated group takes the lead among total number of unemployed people. It is certain that unemployment problem is closely related with the conjuncture. However, the group who easily lose their jobs constitute of people who have no qualification to sell. So, the first point to state is unemployment problem of Turkey is highly structural. The rise in unemployment is closely tied with the quality of the skills to offer.

Table 1. Composition of the rise in unemployment between 2002 and 2009 by education level and age groups

Source: TURKSTAT

If the issue is related with the quality of the "skills to sell", unemployment problem can be solved through transforming the skill capacity of the labor force. What does the transformation of the skill capacity of the labor force implies? Let me give the perfect example from my childhood years. When I was a kid, cotton fluffers used to ventilate, wash, and then fluff the cotton and the woolen mattresses. Then, the technology changed; now there is no need for cotton fluffers. They were left with no skills to sell. Now the mission is to transform the skill capacity of the labor force by teaching those fluffers how to become computer operators. Therefore, the problem is closely related to the design of active labor market policies. Let this be the second point to note.

So, what exactly is the active-passive balance problem in Turkey? As of 2009, 5,829,761 people are assisted with passive labor market policies. On the other hand, number of people benefiting from active employment policies is only 213,852. The reason for this is quite simple: It is extremely easy to design passive labor market policies. You gather around a table, decide, and pay the cost. The support is mainly received by the firm. Then, what is the meaning of supporting almost 6 million unemployed with passive policies? If these policies were not implemented, would unemployment have become higher? Write this down as the third point.

The designing process of active labor market policies is quite complicated. First, you set the needs. Then, define the demand. After that you will design the training courses. Then, you will train staff with appropriate skill set and then match these with firms. This process is quite complex; but it is possible to achieve. The way to solve unemployment problem lies in this mechanism; not in ordering solution.

This is exactly what the democratic chamber movement manifested in the meeting on Thursday. The chamber executives were asked: "Would you consider employing one more worker if the labor force is trained in line with your demands?" Their answer was yes with 80 percent. This point was realized solely by İbrahim Kahveci from Yeni Şafak daily.

Turkey's primary problem is unemployment. And it is possible to solve this problem. The issue is that no one is interested in solving it.

Employment in South Korea, whose population is forty million, equals employment in Turkey of seventy million people. Unemployment rate in South Korea is considerably low despite the crisis. We should think why.

This commentary was published in Referans daily on 20.04.2010