Unemployment Rate

OSKAY SOYSAL&SEDA SÖNMEZIŞIK&İBRAHİM ETEM GİRGİN
2001461168 2001461170 2001461092

UNEMPLOYMENT AND TURKISH CASE
SOME KEY TERMS
TYPES OF UNEMPLOYMENT
UNEMPLOYMENT AND TURKEY

SOME KEY TERMS • Unemployment: can be defined as the number of people (of working age) who are willing and available to work at current wage rates, but not currently employed • Unemployment rate: the percentage of the labour force without a job but registered as being willing and available for work • Labour force: those people holding a job or registered as being willing and available for work • Participation rate: the percentage of the population of working age declaring themselves to be in the labour force

TYPES OF UNEMPLOYMENT

• Frictional Unemployment • Structual Unemployment • Demand Deficient Unemployment • Seasonal Unemployment • Hidden Unemployment

Frictional Unemployment: When somebody loses their job (or chooses to leave it), they will have to look for another one. On average it will take everybody a reasonable period of time as they search for the right job. This creates unemployment while they look. The more efficiently the job market is matching people to jobs, the lower this form of unemployment will be. Structual Unemployment: Structural unemployment occurs when the structure of industry changes. As an economy develops over time the type of industries may well change. This may be because people's tastes have changed or it may be because technology has moved on and the product or service is no longer in demand. Demand Deficient Unemployment: Occurs when there is not enough demand to employ all those who want to work.‘Keynesian’ unemployment occurs in the transitional period before wages and prices have fully adjusted.It is also often known as cyclical unemployment because it will vary with the trade cycle. Seasonal Unemployment: Tends to be in demand for a short period of the year and the rest of the year would certainly be classified as seasonally unemployment. İndustries that suffer particulary are; Hotel and catering, tourism, fruit picking Hidden Unemployment: There are bound to be people who are interested in taking paid work but who are not classified as unemployed. An example of this is discouraged workers - people who have effectively given up active search for jobs perhaps because they have been out of work for a long time and have lost both the motivation to apply for jobs and also the skills required.

A “Modern” view of unemployment A similar categorization is retained, but an important distinction is to be noted between: Voluntary unemployment:when a worker chooses not to accept a job at the going wage rate Involuntary unemployment:when a worker would be willing to accept a job at the going wage but cannot get an offer

The Naturel Rate Of Unemployment

The natural rate of unemployment is the rate of unemployment when the labour market is in equilibrium. • This is entirely voluntary. • It includes: ➢ frictional unemployment ➢ structural unemployment UNEMPLOYMENT AND TURKEY • In 2003, the number of unemployed persons was estimated to be 2 million 493 thousand persons with an increase of 29 thousand persons (1.2%) when compared to the results of the previous year. When the number of unemployed persons decreased in urban areas, it increased in rural. This number decreased by 2.2% for urban areas and it increased by 11.1% for rural areas. • In the year 2003, the unemployment rate increased from 10.3% to 10.5% for Turkey, from 9.4% to 10.1% for female and this rate was 10.7% for male without any changes, when compared with the results of the previous year. • In the year 2003, 17.2% of total unemployed persons (429 thousand persons) comprised from persons loosed their job and 19.3% of those (480 thousand persons) were the first time job seekers. This figures was 20.2% (498 thousand persons) and 20.8%(513 thousand persons) respectively in the previous year. When the number of unemployed persons loosed their job and the first time job seekers decreased in 2003, the share of them in total unemployment also decreased. • In year 2002, the unemployment rate of educated young people was 29.1%. This rate decreased to 27.8% in year 2003. When the unemployed persons was examined by educational status, the share of persons who are illitirate and less than high school graduates and within unemployed persons increased from 62.6% to 65%, the share of persons completed high school decreased from 26.5% to 23.3%. The share of persons upper than high school graduates increased from 10.8% to 11.6%. UNEMPLOYMENT AND TURKEY
| |1999 |2000 |2001 |2002 |2003 |
|Civil Labour |22.925 |22.031 |22.269 |24.347 |23.206 |
|(1000 person) | | | | | |
|Civil Workers |21.236 |20.579 |20.367 |21.658 |20.811 |
|(1000 person) | | | | | |
| Agriculture |8.595 |7.103 |7.217 |7.618 |6.799 |
| Industry |3.664 |3.738 |3.734 |3.953 |3.836 |
| Services |8.976 |9.738 |9.416 |10.086 |10.176 |
|Unemployment rate (%) |7,7 |6,6 |8,5 |10,6 |10,3 |

Nermin ŞENYÜZ&Cenk KUZUCU

UNEMPLOYMENT AND TURKEY

|TOTAL LABOR FORCE AND UNEMPLOYMENT RATE |
| |TOTAL LABOR FORCE(000) |UNEMPLOYED PERSON(000) |UNEMPLOYMENT RATE(%) |
|1993 |21.469 |1.665 |7.7 |
|1994 |22.158 |1.802 |8.1 |
|1995 |22.673 |1.568 |6.9 |
|1996 |22.919 |1.382 |6.0 |
|1997 |21.824 |1.463 |6.7 |
|1998 |22.399 |1.527 |6.8 |
|1999 |23.187 |1.773 |7.6 |
|2000 |22.031 |1.452 |6.6 |
|2001 |23.491 |1.967 |10.6 |
|2002 |23.818 |2.464 |11.4 |
|2003 |23.640 |2.493 |10.3 |

*In this table the total labor force ,the number of unemployed person and unemployment rate of Turkey in the last decade are shown.
*In 1993,the total labor force was 21.469 where as the number of unemployed person was 1.665 and unemployment rate was 7.7%.
*In 1994, the total labor force was 22.158 where as the number of unemployed person was 1.802 and unemployment rate was 8.1%.Unemployment rate increased from 7.7% to 8.1%.
*In the years of crisis,for example between the years of(1994-1999-2001) it is seen that unemployment rate has increased.
*The unemployment rate in 2002 is 11.4% and it is the highest rate of the last decade.
*In 2003,the unemployment rate has decreased to 10.3%.

|DEVELOPMENTS IN THE DOMESTIC |
|LABOR MARKET |
|CIVILIAN EMPLOYMENT BY SECTOR |2001 |2002 |2003 |
|AGRICULTURE |8.089 |7.458 |7.165 |
|INDUSTRY |3.774 |3.954 |3.846 |
|SERVICES |9.661 |9.942 |10.135 |
|CONSTRUCTION |1.110 |958 |965 |
|UNEMPLOYMENT RATE (%) (RURAL-URBAN) |………. |……… |……….. |
|URBAN |11.6 |14.2 |13.8 |
|RURAL |4.7 |5.7 |6.5 |
|UNDEREMPLOYMENT RATE (%) |6.0 |5.4 |4.8 |

http://www.die.gov.tr

*The unemployment rate in urban areas is more than rural areas.
*The underemployment rate decreased in Turkey in last three years.

|THE UNEMPLOYED PERSON AND UNEMPLOYMENT RATE OF COUNTRIES(2000) |
|COUNTRIES |UNEMPLOYED |UNEMPLOYMENT RATE |
| |PERSON | |
|BELGIUM |308.156 |7.0 |
|FRANCE |2.626.400 |10,0 |
|GREECE |478.346 |10,8 |
|ITALY |2.545.000 |10,8 |
|NORWAY |81.000 |3.4 |
|ENGLAND |1.580.000 |5.3 |
|SPAIN |2.370.390 |14.1 |
|PORTUGAL |191.000 |3.8 |
|TURKEY |1.452.000 |6.6 |

*In 2000,France was the country that has the most unemloyed person population 2.626.400.The unemployment rate was 10.0%.
*Spain was the country that has the most unemployment rate.The rate was14.1% also unemployed person was 2.370.390.

*In 2000 unemployed person in Turkey was 1.452.000 where as the unemployment rate was 6.6%.
……………………,………………

*In this diagram shows that regionally total labor force,employment and unemployment rate of Turkey in 2003.
*In Turkey,regionally Karadeniz Region has the most employment rate that it is 59% and İç Anadolu Region has the least employment rate that it is 38%.
*In Turkey,regionally Güneydoğu Anadolu Region has the most unemployment rate that it is 21% and the Karadeniz Region has the least unemployment rate that it is 5%.

*We can see in this diagram that employment rate of regions and sectors.
*In Turkey ,regionally Karadeniz Region has the most employment rate of agricultural sector.Marmara has the least employment rate of agricultural sector.
*Marmara Region is first in industry sector.
*In general employment rate of consruction is low in Turkey.Particulary Karadeniz Region has the least employment rate of consruction sector
*In Turkey,regionally İç Anodolu Region has the most employment rate of services in Turkey and Karadeniz Region has the least employment rate of services.
(In 2003 the unemployment rate of educated young people is 27.8%

SELDA &EMİNE&TUĞBA ŞENBABAOĞLU UNEMPLOYMENT CONCEPTS AND DEFINITIONS
In a defined time period (reference period) population above the certain age are composed of three basic groups in terms of labour force; employed, unemployed and not in labour force. Labour force is made up of employed and unemployed persons. These are summarised as follows;
WORKING AGE POPULATION = LABOUR FORCE + NOT IN LABOUR FORCE
LABOUR FORCE = EMPLOYED + UNEMPLOYED LABOUR FORCE
Comprises all employed persons and all unemployed persons.
LABOUR FORCE PARTICIPATION RATE
Indicates the ratio of the labour force to the population 15 years of age and over.

Labour Force X 100 Working Age population
EMPLOYED
Comprises all the persons 15 years of age and over and included in the "Persons at work" and "not at work".
INFORMAL SECTOR
Informal sector is defined as all non-agricultural economic units which are unincorporated (establishments whose legal position is individual ownership or simple partnership), paying lump sum tax, or no tax at all and working with 1-9 engaged persons.
EMPLOYMENT RATE
Indicates the ratio of employed persons to the population 15 years of age and over.
UNEMPLOYED
The unemployed comprises all persons 15 years of age and over who were not employed (neither worked for profit, payment in kind or family gain at any job even for one hour, who have no job attachment) during the reference period who have used at least one channels for seeking a job during the last three months and were available to start work within 15 days. Persons who have already found a job or established his/her own job but were waiting to complete necessary documents to start work and who were available to start work within 15 days were also considered to be unemployed. Calculating the Unemployment Rate
The unemployment rate – the number of unemployed individuals divided by the number of people in the civilian labor force then multiplied by 100. PERSONS NOT IN LABOUR FORCE
1. Sought a job, but not using the channel in the last three months
2. Available to start a job but not actively seeking
3. Seasonal workers
4. Housewives
5. Student
6. Retired persons
7. Having Property Income
8. Disabled , old or ill
REFERENCE PERIOD
The seven days preceeding the application day of the survey was used as the reference period.
The natural rate of unemployment
The natural rate of unemployment is the rate of unemployment when the labour market is in equilibrium.
This is entirely voluntary.
It includes: frictional unemployment structural unemployment Unemployment as Government’s Problem
Full employment – an economic climate in which just about everyone who wants a job can have one. Unemployment as Government’s Problem
The target rate of unemployment is the lowest sustainable rate of unemployment that policymakers believe is achievable under existing conditions.
Whose Responsibility Is Unemployment?
Classical economists believe that people are responsible for their own jobs.
Keynesian economists believe that society owes people jobs commensurate with their training or past job experience. Unemployment from real wage rigidity
TYPES OF UNEMPLOYMENT
Economists used to classify unemployment as frictional, technological, sctructural, cyclical, voluntary, involuntary, seasonal unemployment.....
FRICTIONAL UNEMPLOYMENT
Until workers make the shift between the two industries they are unemployed.We call this frictional unemployment. TECHNOLOGICAL UNEMPLOYMENT
If a machine is introduced that displaces some workers , then they will be unemployed until they enter other jobs.This is known as technological unemployment.
Structural Unemployment
Unemployment due to fundamental economic changes that eliminate some jobs, while creating other jobs for which qualified workers may not be readily available
Normal due to technological advancement and changes in consumer preferences
Cyclical Unemployment
Seasonal Unemployment
VOLUNTARY UNEMPLOYMENT
People reveal that the private benefits from unemployment exceed the private cost in wages forgone, society derives no direct return from the payment of unemployment benefit which individuals regard as aprivate benefit from being unemployed.
INVOLUNTARY UNEMPLOYMENT
Keynesian unemployment is involuntary and therefore a disadvantage to private individuals who would prefer to be employed. Socially it represents wasted output. Society may also care about the human misery inflicted by involuntary unemployment.A worker is involuntary unemployed if he or she would accept a job offer at the going wage rate.
CAUSES
Cyclical unemployment is caused by falling AD structural u.is caused by changing structure of the economy or due to introduction of new technology…making workers immobile seasonal u.is caused by changes in seasons frictional u. is caused by lack of information…people do not know about the vacancies... EFFECTS OF UNEMPLOYMENT effects to the individual effects to the family effects to the economy and government
EFFECTS TO THE INDIVIDUAL
Unemployed loses their self-esteem become depressed get violent mentally disturbed lead to suicide, drug addiction, vandalism loss of productive services
EFFECTS TO THE FAMILY
Loss of family income leading to falling expenditure increase in domestic violence higher divorce rates

EFFECTS TO THE ECONOMY & GOVERMENT
Unemployment leads to under-utilization of resources economy therefore cannot reach its optimum production level
Productivity falls….GDP falls…economic growth falls
Higher crime rates…government spending on security..etc-police ….increases
In developed countries they become a burden to the G…must pay more unemployment benefits
Government tax revenue falls…since less people working Policies to Reduce Unemployment
Most economist would agree to use Discretionary Fiscal or Monetary Policy when there is prolonged CYCLICAL UNEMPLOYMENT
There is less agreement about What POLICY to use
There are problems with Discretionary Policy
Can the Unemployment Rate Be Reduced to Zero?
No.
In the real world, where structural unemployment exists, any attempt to increase aggregate demand to push the rate of unemployment down to zero will create job vacancies for the skills that are in short supply and in the locations where labor is scarce, but will have no effect in areas where there is skill mismatch or location mismatch.

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