turkey 2016-oecd-economic-survey-removing-productivity-bottlenecks
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2016 OECD ECONOMIC SURVEY OF TURKEY
Removing productivity bottlenecks Gaziantep, July, 15th
@OECD @OECDeconomy
http://www.oecd.org/eco/surveys/economic-survey-turkey.htm
2
Growth remained strong despite headwinds
Source: OECD (2016), OECD Economic Outlook: Statistics and Projections (database).
-6
-4
-2
0
2
4
6
8
10
-6
-4
-2
0
2
4
6
8
10
2008 2009 2010 2011 2012 2013 2014 2015
Annual GDP growth in %Annual GDP growth in %
3
Growth is increasingly inclusive
Source: Turkish Statistical Institute. 1. Employment rate in % of population with less than upper secondary education
0
10
20
30
40
50
60
70
0
10
20
30
40
50
60
70
2008 2009 2010 2011 2012 2013 2014
Low-skilled employment¹
Men Women
4
Income inequality has declined
Source: Turkish Statistical Institute.
0
3
6
9
12
15
18
21
0
3
6
9
12
15
18
21
Poorest 2 3 4 5 6 7 8 9 Richest
%%
Equivalised disposable income deciles
Income convergenceGrowth of real average disposable incomes, 2007-13
5
The external imbalance remains large
Source: OECD (2016), OECD Economic Outlook: Statistics and Projections (database)
-10
-8
-6
-4
-2
0
2
4
-10
-8
-6
-4
-2
0
2
4
1995 2000 2005 2010 2015
% of GDP% of GDPCurrent account balance
6
Well-being can be further improved
Source: OECD (2016), OECD Better Life Index, www.oecdbetterlifeindex.org.
0123456789Income
Jobs
Housing
Work-life balance
Community
EducationEnvironment
Civic engagement
Health
Life satisfaction
Safety
Turkey
Low income OECD¹
High income OECD²
1. Lower third of OECD countries, other than Turkey, in terms of GDP per capita : CZE, SVN, PRT, SVK, EST, GRC, HUN, POL, CHL and MEX 2. Upper third of OECD countries in terms of GDP per capita : LUX, NOR, CHE, USA, IRL, NLD, AUT, DNK, SWE, DEU and AUS
7
Inflation remains too high
Source: OECD (2016), OECD Economic Outlook: Statistics and Projections (database); Central Bank of the Republic of Turkey.
0
1
2
3
4
5
6
7
8
9
10
11
12
0
1
2
3
4
5
6
7
8
9
10
11
12
Jan-
12
Apr-1
2
Jul-1
2
Oct-1
2
Jan-
13
Apr-1
3
Jul-1
3
Oct-1
3
Jan-
14
Apr-1
4
Jul-1
4
Oct-1
4
Jan-
15
Apr-1
5
Jul-1
5
Oct-1
5
Jan-
16
Apr-1
6
Inflation Inflation expectations (24-months ahead) Target
8
Domestic savings have fallen
Source: World Bank (2016), World Development Indicators.
12
14
16
18
20
22
24
26
12
14
16
18
20
22
24
26
1995 2000 2005 2010 2015
% of GDP% of GDPGross national savings
9
Many jobs are informal
1. Persons with less than secondary education. 2. Including the self-employed. Source: Turkish Statistical Institute.
0
20
40
60
80
100
0
20
40
60
80
100
Men Women
The majority of low-educated workers, especially women are informally employed ¹ ²Formal Informal
10
Informality drags down productivity
Source: Turkish Statistical Institute; Central Bank of the Republic of Turkey.
0
50
100
150
200
250
300
0
50
100
150
200
250
300
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Thousand TRYThousand TRYSales per worker, 2003 prices
All firms (including informal ones) Fully formal firms
11
Participation in global value chains is relatively low
Note: The backward participation index is defined as the share of foreign value added in a country's gross exports. Forward participation is defined as the ratio of domestic value added embodied in foreign countries' exports over gross exports. Source: OECD/WTO (2016), "Trade in value added", OECD-WTO: Statistics on Trade in Value Added (database). DOI: http://dx.doi.org/10.1787/data-00648-en.
0
10
20
30
40
50
60
BRA
RUS
ARG
HRV
CHL
IND
ROU
GRC
TUR
MEX
CHN
POL
PRT
EST
SVN
VNM
THA
BGR
MYS
CZE
SVK
HUN
A. Backward participation
0
5
10
15
20
25
30
35
40
45
HRV
MEX
TUR
THA
CHN
VNM
ARG
HUN
BGR
PRT
GRC
IND
CZE
MYS
EST
SVK
SVN
POL
BRA
ROU
CHL
RUS
B. Forward participation
12
Turkey’s share of high value-added exports lags
Note: A high-value product's unit value exceeds the world reference by at least 15%. The world reference is the world median of all unit values weighted by the value of their trade flow for a given year. OECD peers are the 10 countries, other than Turkey, with the lowest per capita GDP in the OECD: Czech Republic, Slovenia, Portugal, Slovak Republic, Estonia, Greece, Hungary, Poland, Chile and Mexico. Non-OECD peers include Argentina, Bulgaria, Brazil, China, Croatia, India, Malaysia, Romania, Russia, Thailand and Vietnam. Source: CEPII Trade Unit Value database, see Emlinger and Piton (2014), "World trade flows characterization: Unit values, trade types and price ranges", CEPII Working Papers, No 2014-26.
0
10
20
30
40
50
60
70
0
10
20
30
40
50
60
70
Energy Food,agriculture
Textiles Wood,paper
Chemicals Iron & steel Nonferrous
Machinery Vehicles Electrical Electronic
Turkey OECD peers Non-OECD peers
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REMOVING BOTTLENECKS
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Employment regulations are rigid
How to read this figure: The figure shows how far Turkey, and its OECD peers (the bottom third of OECD countries in GDP per capita) are from OECD best practice in employment regulations. OECD best practice is defined as the average practice of the best three OECD countries in each area. Source: OECD, Employment Protection Legislation indicators; OECD Minimum wage database; OECD Labour Tax Wedge Decomposition database.
Reduce labour tax wedges and employment costs for the low-skilled. Enhance the flexibility of employment rules for all firms. Encourage minimum wage moderation and engage social partners in a wage
path consistent with disinflation and external rebalancing.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Severance pay Standard fixed-termcontracts
Length of notice period Minimumwage/median wage
ratio
Labour tax wedge
Distance to OECD best practicesTurkey OECD peers
15
Product market regulations are restrictive
How to read this figure: The figure shows how far Turkey, and its OECD peers (the bottom third of OECD countries in GDP per capita) are from OECD best practice in product market regulations. OECD best practice is defined as the average practice of the best three OECD countries in each area. Source: OECD Indicators of Product Market Regulation.
Continue to improve the regulatory framework for doing business, using OECD product and labour market and competition policy indicators as benchmarks.
Consider an OECD Competition Assessment Review to help in this process. Consider a “zero cost licencing” initiative for start-ups.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Licenses andpermits system
Administrativeburdens forcorporations
Administrativeburdens for sole
proprietors
Barriers in servicesectors
Price controls Competitionadvocacy
Distance to OECD best practices
Turkey OECD peers
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Barriers to investment affect foreign firms
Source: World Bank (2013), Enterprise Survey; and OECD calculations.
Investment obstacles reported by fully formal firms Index scale 0 (no obstacle) to 4 (very severe obstacle)
Strengthen the rule of law, judiciary independence and the fight against corruption. Reduce barriers to foreign direct investment.
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0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Corruption Political instability Informal competitors Tax rates
Domestic private Foreign private State-owned
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Educational outcomes are still low
Note: For Brazil, Chile, France, the Russian Federation and Saudi Arabia, the year of reference is 2013, for China, 2010, for Indonesia, 2011 and for South Africa, 2012. Source: OECD (2015), Education at a Glance 2015: OECD Indicators, OECD Publishing, Paris. DOI: http://dx.doi.org/10.1787/eag-2015-en.
Percentage of adults who have attained at least upper secondary education Per cent, 2014
Implement the education reforms foreseen in the 2016 Action Plan to improve curricula and increase the autonomy of schools and universities.
0
10
20
30
40
50
60
70
80
90
100
0
10
20
30
40
50
60
70
80
90
100
CHN
IDN
MEX
TUR
CRI
PRT
BRA
SAU
COL
ESP
ITA
CHL
ZAF
GRC ISL
BEL
NZL
FRA
NLD
AUS
IRL
GBR
DNK
SWE
NOR
HUN
AUT
KOR
ISR
SVN
FIN
DEU
CHE
LVA
USA
CAN
POL
SVK
EST
LTU
CZE
RUS
18
Professional management is still scarce
Note: Survey average to the question: "In your country, who holds senior management positions?" [1 = usually relatives or friends without regard to merit; 7 = mostly professional managers chosen for merit and qualifications]. Source: World Economic Forum (2015), Executive Opinion Survey.
Reliance on professional management
Focus upskilling programmes for small entrepreneurs on basic management, foreign languages and digitalisation.
0
1
2
3
4
5
6
7
0
1
2
3
4
5
6
7
ITA
BGR
VNM
HUN
HRV
GRC
ROU
IND
RUS
SVN
PRT
TUR
MEX
POL
SVK
ARG
BRA
CHN
ESP
THA
CHL
KOR
ISR
FRA
CZE
AUT
JPN
MYS
DEU
AUS
CAN
GBR
BEL
SWE
USA
DNK
IRL
CHE
NLD
FIN
NOR
NZL
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ICT is under-used
Note: Enterprise resource planning (ERP) systems are software-based tools that can integrate the management of internal and external information flows. Supply chain management refers to the use of automated data exchange (ADE) applications. Radio Frequency Identification (RFID) is a technology that enables contactless transmission of information via radio waves. Reported as a percentage of enterprises with ten or more persons employed.
Source: OECD (2015), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society, OECD Publishing, Paris, DOI: http://dx.doi.org/10.1787/sti_scoreboard-2015-en
Diffusion of selected ICT tools and activities in enterprises, 2014
Improve the ICT infrastructure. Use public campaigns to disseminate international best management practices.
0
10
20
30
40
50
60
70
80
90
100
0
10
20
30
40
50
60
70
80
90
100
Broadband Website E-purchases Social media ERP E-sales Supply chainmngt. (ADE)
RFID
Turkey OECD average
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KEY RECOMMENDATIONS
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Strengthening resilience and social cohesion
Fully implement the reforms of the 2016 Action Plan and enact systematic monitoring and reporting on actual implementation.
Strengthen the rule of law, judiciary independence and the fight against corruption.
Upgrade child care facilities throughout the country.
Reduce barriers to foreign direct investment.
Publish consolidated quarterly general government accounts according to international accounting standards.
Publish a regular Fiscal Policy Report including all contingent and long-term liabilities.
22
Increasing savings and reducing inflation
Continue to contain consumer credit.
Promote private pension savings.
Increase foreign exchange reserves.
Simplify the monetary policy framework.
Tighten monetary policy unless inflation declines faster than projected.
Encourage minimum wage moderation and engage social partners in a wage path consistent with disinflation and external rebalancing.
23
Boosting productivity
Implement the education reforms foreseen in the 2016 Action Plan to improve curricula and increase the autonomy of schools and universities.
Reduce labour tax wedges and employment costs for the low-skilled.
Enhance the flexibility of employment rules for all firms.
Avoid tax thresholds for higher productivity and larger firms.
Focus upskilling programmes for small entrepreneurs on basic management, foreign languages and digitalisation.
Improve the social safety net for displaced workers by upgrading active labour market programmes, including those adapted to refugees.
24
Participating in global value chains
Align the Customs Union agreement with the EU with the most open and all-encompassing international trade agreements, and develop similar agreements with other countries.
Invest more in vocational training and research-and-development.
Improve the monitoring of polluting activities and the enforcement of environmental regulations, and use economic instruments such as pollution taxes, carbon taxes and emission permits.
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For more information
http://www.oecd.org/eco/surveys/economic-survey-turkey.htm
Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.