Social Protection Programs under COVID-19
The COVID-19 crisis has brought social safety nets to people’s attention once again, as governments had to step in to offset the impact of economic downturn on their citizens. Due to the pandemic, countries worldwide have implemented three main types of social protection responses targeting different groups. These are: 1) labor market measures such as wage subsidies, unemployment benefits, and contribution waivers; 2) cash transfers; and 3) temporary benefit increases (Gentilini, 2020).
Figure 1: Social Protection Responses to the COVID-19 Pandemic
To address the early on impacts of the pandemic, most countries focused on providing emergency cash assistances, like in Tunisia, where the government expanded the existing AMEN cash transfer program to assist the poor and most vulnerable. As the crisis developed, countries started to build on other existing social protection programs such as unemployment benefits, family assistances, disability benefits or in some cases creating new social assistance programs.
Labor Market Assistances Under COVID-19
In the short to medium term, however, the first group of benefits identified in Figure 1, labor market measures such as wage subsidies and unemployment benefits, became important as the formal sector workers began facing the possibility of losing their jobs. In this period, a stark difference appeared in countries with different labor market measures in place to face the pandemic. The Washington Post wrote about the different measures taken by the United States and Germany, two wealthy countries. In Germany, the existing regulations of the short-time work program (Kurzarbeit) allowed people to keep their jobs (Long and Van Dam 2020). This program encourages employers to reduce working hours of their employees to 60 percent instead of firing them. In return, for those workers with reduced working hours, the government subsidizes the employees salaries. On the other hand, the US unemployment benefit model is to wait until companies lay people off, and then, unemployed workers become eligible for unemployment checks given out by the government. This resulted in a huge difference in unemployment rates between the two countries in early 2020.
Figure 2: Unemployment Rate in US and Germany
Turkey’s Unemployment Rate Before and After the Pandemic
Using a similar method, I created a chart to understand where Turkey stands in comparison to the other OECD countries in terms of unemployment rate in 2020. Based on OECD data, Turkey already had the third highest unemployment rate among OECD countries right before the COVID-19 pandemic hit most countries in February 2020 (OECD 2021). Turkey’s unemployment rate in February 2020 was 12.6 percent; the only countries with higher unemployment rates were Greece at 15.9 and Spain 13.50 percent. The OECD average in February 2020 was at 5.21 percent, less than half of Turkey’s unemployment rate.
Figure 3: Unemployment Rate in OECD Countries
Though Turkey had one of the highest unemployment rates before the pandemic, the country managed the formal labor market better than some other OECD countries after being affected by COVID-19. Colombia’s unemployment rate, for example, increased from 10.85 percent in February to 21.12 percent in May, making it one of the highest. Similarly, the unemployment rate in United States spiked from 3.5 percent in February to 14.7 percent in April, which made the unemployment rate in the US higher than even that of Turkey for the month of April. On the contrary, Turkey’s unemployment rate had a small incline of 1.7 percent, reaching its highest point of 14.3 percent in June (OECD, 2021).
This is not to say that Turkey does not have high unemployment. Countries like Czechia are praised for their pre-pandemic and pandemic labor market regulations that allowed them to keep unemployment rate at overall less than 3 percent. While Turkey does have much higher unemployment, the country maintained a stable unemployment rate.
Turkey’s Labor Market Programs in 2020
Turkey started implementing labor market assistances targeting income and job protection soon after the country’s first recorded case of COVID-19 on March 11. The largest program that was expanded during 2020 is the “reduced hours employment program” (kisa calisma odenegi) (ISKUR 2021). Under this program the government banned lay-offs and began providing subsidies to the private sector firms to supplement employee wages. Private sector employees could decrease their weekly working hours to at least 2/3rd of their full-time employment. In exchange, the government would subsidize participating private sector firms 2/3rd of their employees’ salaries. This way, employees retain their employment during the pandemic, although with reduced income. While initially expanded for three months, the program has been renewed multiple times and is currently valid until February 2021 (Kasap, 2021).
Additionally, in April 2020 the government introduced a new “cash assistance” (nakdi ucret destegi) program for the employed to target loss of income (ISKUR, 2021). This program targets those employees who remain officially employed but are furloughed by their employer due to lack of income or closures during the COVID-19 pandemic. Thus, the government provides these employees 50 percent of their original salary. Once again, this program was renewed multiple times, and is currently active at least until March 2021.
More recently, the Ministry of Trade has also introduced several assistances for small businesses affected (closed or partially closed) by COVID-19 (Ticaret Bakanligi, 2020). The recently introduced “loss of income support” (gelir kaybi destegi) will provide small businesses with 1000 Turkish lira (139 US dollars) for three months, and the “rent support” (kira destegi) will provide small businesses with 750 Turkish lira (104 US dollars) for three months for rent payments. Finally, the Turkish government has been offering tax breaks and low interest loans through publicly owned banks to firms in order to help with the pandemic and decrease the number of layoffs.
Turkey entered the pandemic with one of the highest unemployment rates among the OECD countries. On the other hand, the country was able to limit the number of redundancies through multiple income subsidies and other assistances for businesses and employees. The pandemic, however, is not over yet. Moving forward, Turkey should continue focusing on income substitution programs while expanding available financial support especially to small and medium enterprises. While this may not be an easy task, it is crucial to keep unemployment levels in the country at acceptable levels.
Gentilini, U (2020), “Weekly social protection links: 04 September 2020”, Socialprotection.org https://socialprotection.org/discover/blog/weekly-social-protection-links-04-september-2020
ISKUR (2021), Kisa calisma odenegi, Genel bilgiler https://www.iskur.gov.tr/isveren/kisa-calisma-odenegi/genel-bilgiler/
ISKUR (2021), Nakdi ucret destegi https://www.iskur.gov.tr/is-arayan/issizlik-sigortasi/nakdi-ucret-destegi/#:~:text=Koronavir%C3%BCs%20(Covid%2D19)%20salg%C4%B1n%C4%B1n%C4%B1n,ve%20%C4%B0%C5%9EKUR%20taraf%C4%B1ndan%20yap%C4%B1lan%20%C3%B6demedir.
Kasap S (2021), “İşsizlik ve kısa çalışma ödeneği ödemeleri 5 Şubat'ta yapılacak” , Anadolu Agency https://www.aa.com.tr/tr/turkiye/issizlik-ve-kisa-calisma-odenegi-odemeleri-5-subatta-yapilacak/2128697
Long, H and A Van Dam (2020), “As U.S. unemployment soared, Germany’s barely budged. Is America’s safety net enough?”, Washington Post https://www.washingtonpost.com/business/2020/10/13/germany-unemployment/
OECD (2021), Unemployment rate (indicator). doi: 10.1787/52570002-en https://data.oecd.org/unemp/unemployment-rate.htm
Ticaret Bakanligi (2020), Koronavirus Salgini Nedeniyle Verilecek Hibe Destegi Programi ve Uygulama Esaslari Hakkinda Teblig, Resmi Gazete, no: 31344 https://www.resmigazete.gov.tr/eskiler/2020/12/20201224-13.htm