In Turkey informality in economic activities is quite prevalent. There is no need to write long reports to realize of this phenomenon. Particularly, there is no need for H.E. Prime Minister of Turkey to say 'we are aware of those who practice informal employment.' In fact, anyone who takes a look at the yellow pages in Hürriyet daily realizes that informal employment is practiced in Turkey. This continues to remain as the hunchback of Turkey.  However there is another relevant fact. An ever increasing part of the total labor force becomes registered in the Social Security Institution (SSI). The number of those becoming registered increased almost by 50 percent from 2002 to 2010. Turkey's economy shifts to the formal sector rapidly over the last eight year. Why is the reason? The reason is that the government introduced measures to reduce the cost of employment. H.E. Prime Minister of Turkey might be unaware but the measures the government took work. If you want to learn the details please keep on reading.

Do you occasionally take a look at the yellow pages at Hürriyet daily? They are the short ads I like the most mostly reading: "we look for polisher masters, foremen, and apprentices. SSI coverage + accommodation + Food included" The add presents a legal obligation, the obligation to provide social security coverage as a fringe benefit. This is the reality that applies both in the western and eastern region of the country. There is no need for inquiry information or supervision reports to acknowledge this. It is enough to take a look at the yellow pages of Hürriyet daily. Informality is a fact in Turkey. Turkey does not have an informal economy; Turkey has a system left on purpose to be dominated by informality. And this is a source of shame for Turkey which has an economy able to compete in the premier league. Turkey still has a third-world specific fiscal system. This is the first point to stress.

The graph below gives the share of SSI covered people in total number of waged workers in Turkey. The share of SSI covered people in total employed population increased from 48 percent in 2001 to 71 percent in 2009. This implies that an ever growing part of the employed population become registered in the SSI. Turkey's economy shifted to the formal employment rapidly in the rule of the current government. This is an evident fact when the 2002-2009 period is examined. Over the same period, employment increased by 2.5 million people. Here let us underline that in the periods of economic growth private sector generated considerable employment gains. On the other hand, over the same period the number of workers registered in the SSI increased by 3.5 million people. So, why did the number of SSI registered workers increased above the number of the newly employed? It is elementary my dear Watson: as the enterprises entered the formal economy in the 2002-2009 period, the number of registered workers increased more than the number of new waged workers. Was this clear? So, this is the second point to underline.

Source: SSI, TURKSTAT

Now, let us skip to the expert question: Why do you think the shifts to formal economy gained pace between 2002 and 2009? It is again quite simple: Over this period the government took critical steps to reduce the burden on employment. It listened to the demands of the business world, fulfilled its part, and got fruitful results. So, the government cannot say "they convinced me to take measures but did not fulfill their part." The government took the necessary steps, the Treasury undertook almost 20 percent of the employment costs and got the reward of its efforts via the increases in formal economic activities. Moreover, thanks to the additional measures taken in 2008, the rise in unemployment was limited. The rises we experience today are the limited rises in unemployment. This is what the studies conducted by TEPAV reveals. So, this is the third point to keep in mind.

So, what comes next? Turkish Confederation of Employer Associations (TİSK) declared again the day before that despite all the measures taken Turkey remains as the OECD leader concerning burdens on employment. The government took a step and got the return from employers far and away. This example should be addressed and examined in detail. The evidence for the existence of the cake is that it can be eaten. The steps that worked yesterday will also work in the future. There is no sense in saying "We did all they asked but it does not work." A part of the steps that should be taken are apparent.

Turkey's most important problem is unemployment. And the solution to this big problem is evident.

Kindly submitted to the information of esteemed administrators of Turkey

This commentary was published in Referans daily on 22.04.2010