Turkish ban on layoffs keeps lid on jobless but labour participation languishes

ISTANBUL: Turkey's labour participation rate languished at 47.6% in the April-June period as a coronavirus lockdown weighed, while a ban on layoffs saw the unemployment rate edge up just slightly to 12.9%, data showed on Monday.

The impact of the economy hitting a near stand-still was also evident in employment, which dropped 2.4 million year-on-year in the period to 25.9 million. Labour force participation fell from 52.9% a year ago but rose from 47.2% a month earlier.

The unemployment rate was 12.8% both a month earlier and in April-June 2019. The non-agricultural unemployment rate rose to 15.2% from 15.0% a year earlier, according to the Turkish Statistical Institute (TUIK).

In April, the government imposed a three-month ban on layoffs to mitigate the impact of the pandemic. Analysts have said the unemployment figure reflects the narrow definition used, with those on unpaid leave not included.

Enver Erkan, an economist at Tera Yatirim, said the unemployment rate would have been higher had it not been for government measures, including the lay-off ban and other wage support systems.

"Companies will lay off more workers if the employment supports are not extended or removed," he said in a note.

"However, as long as the government supports employment, the unemployment rate will point to relatively low rates, as 'practically non-working people will be included in employment,'" Erkan added.

Parliament last month approved a law allowing President Tayyip Erdogan to extend the layoff ban until July 2021.

The law gives Erdogan the authority to decide for each sector whether to extend the short labour pay benefit, a system providing additional pay to employees whose hours are cut short.

The labour force participation rate among those aged 15-24 tumbled to 35.4% in April-June from 43.6% a year earlier, with the unemployment rate rising to 24.9% from 23.3%, the TUIK data showed.

It said the number of those not in the labour force because they have lost hope of finding work jumped to 1.358 million from 558,000 a year earlier.