Below is the weekly guest column by Taylan Bilgic, which was published yesterday at the Daily News. As usual, I have a few comments right below the article…

[Getting half of the votes for a new term after nine years in power gives huge clout to a political party – and the Justice and Development Party, or AKP, has given strong signals that it will take advantage of its clout to the fullest extent. In the crucial area of economy, the signals do not bode well for organized labor.

Introducing the 61st government’s program in Parliament on July 8, Prime Minister Recep Tayyip Erdoğan laid out an ambitious target of cutting the nation’s jobless rate to 5 percent by the year 2023. The official unemployment rate stands at 10.8 percent as of March: it is down from a post-crisis peak of 16.1 percent in February 2009, but nevertheless is unacceptable for an economy that aims to rank among the world’s top 10. Today, the April figures will be revealed as a drop to the single-digit level is expected, but many analysts will tell you it is seasonal.

The jobless rate has always been the Achilles’ heel of the AKP rule, smirking at policy makers among other data that on paper displays a rosy economic outlook. The official number of unemployed is over 2.8 million, but the Confederation of Progressive Trade Unions, or DİSK, adds those “who have lost hope to find a job” to the figure, reaching the mind-boggling figure of 5 million.

It’s no surprise, then, that in every opinion poll the Turkish public puts joblessness as the top problem, even ahead of the Kurdish issue, education, health care or security.

Thus, the renewed focus on joblessness should be a welcome development. But it seems that Erdoğan aims to solve the problem through changing the definition of what a job is.

“To increase employment and reduce the unregistered economy, we will remove the rigidity of our labor market, in light of an understanding of a secured flexibility and the principle of protecting the individual, not the job,” Erdoğan told lawmakers on July 8. He then announced that there was a “problem” of severance payment in Turkey, which “created pressures for payment on companies and has become one of the main problems in working life.” Paradoxically, he added that most workers in Turkey were not receiving this severance pay anyway.

Thus, the first salvo in a potential collision course with organized labor has been fired. With eager support from business groups, the government will probably move as early as autumn to kill the right to severance pay. The next step could be introducing a “regional minimum wage,” which would be even lower than the current 660 Turkish Liras ($401) per month.

To tell the truth, the government has the upper hand, as labor unions remain weak even three decades after the Sept. 12, 1980, military coup, which stripped labor of many hard-won rights. According to December 2010 data, the number of unionized workers stands at 3.2 million, around 59 percent of the labor force. But the number of workers who benefit from collective bargaining (really organized labor, if you will) is only half a million – and even they are divided among three rival confederations.

I remember attending a meeting of industrialists years ago in the western city of Bursa. Responding to various criticisms toward the government, one businessman had asked: “Did any other government let you employ workers and do business in such convenient conditions?”

As Erdoğan prepares to make it much easier to hire and fire, the firm “class perspective” of that businessman is proven to be on the mark.]

I like this article, particularly because it is against something that I firmly believe in: Labor markets need to be made more flexible in Turkey. Of course, this is a “big word”, which can mean almost anything, so although I think there are quiet a few elements of labor market reform, I will mention just the ones in the article. As you can see from World Bank data, Turkey has one of the highest severance pays in the world, significantly more than many developed & emerging markets. This should not be an issue of  full severance versus zero severance, but it is clear that Turkish severance pay is higher than peers, putting Turkish firms at a competitive disadvantage. As for the regional minimum wage, I think, like many labor economists, that it is a really good idea. Make it higher for Istanbul, where it is impossible to get by with the current minimum wage, and lower in the Southeast, giving firms more incentives to hire workers (officially). BTW, if you speak Spanish, you can find my views on the Turkish labor market in my interview with El Mundo.

But Taylan is also raising another issue, the power seesaw between labor and business. On that, I don’t have much to say, as I am not that familiar with the history of organized labor movement in Turkey.

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