Turkey on the edge of crisis, must act on unemployment - economist
The spread of the coronavirus has brought Turkey to the verge of a social crisis and the government must prevent employers laying off staff to prevent it, Berlin School of Economics and Law associate professor Ümit Akçay said in an interview with Sözcü daily.
The Turkish government put together a $15-billion stimulus package to mitigate the virus’s impact on the economy, but Akçay called the measures confused and said it was unrealistic to expect the tax reductions and holidays it contained to be sufficient.
“I can see two options given the current situation: Either the economic administration has foreseen that the problems will worsen and held back in its first package of measures, or it has failed to conceive the magnitude of what we are experiencing,” said Akçay.
The economist said that containing the coronavirus was a matter of life and death and that all methods of providing funding to battle its impact should be considered, including directly borrowing from the central bank.
But the government’s limited package of measures showed that its priority was to protect capital rather than the country’s working class, he said.
Turkey’s main opposition Republican People’ Party has called on the government to pay the wages of non-essential workers so they will be able to follow experts’ advice to stay at home and self-isolate.
But the government’s stimulus package has done little for the many low-wage workers and local business owners who will suffer the worst economic impact from the pandemic. Instead, the ruling party has looked to its tried and tested method of trying to reinvigorate the economy by encouraging borrowing, Akçay said.
“When you’re holding a hammer, you see every problem as a nail,” he said.
This will do little for the fresh wave of unemployment that is likely to strike Turkey, which is still reeling from the damage dealt by a currency crisis that struck in August 2018 and slowed economic growth the following year.
“First there must be a ban on laying off workers, a holiday should be granted on personal credit repayments and support should be offered to households,” Akçay said. “This is the only way that people will be able to stay at home.”
Unless employers are forced to keep their workers on the books throughout the crisis, Turkey will have a full-blown social crisis on its hands, he said.
“Official unemployment figures are at a record high. When we put this on top of the new recession (Turkey is likely to enter), we could well face a social crisis,” he said.