Social Dimension of Privatization in Turkey: Employment and Labor Adjustment Policies

1. REPUBLIC OF TURKEYPRIME MINISTRYPRIVATIZATION ADMINISTRATIONwww.oib.gov.tr OECD MEETING 10-11 October 2002, İstanbul Social Dimension of Privatization in Turkey: Employment and Labor Adjustment Policies M. Hakan YILDIZ Vice President, PA

2. PRIVATIZATION LAW Privatization policies must not only pay attention to economic outcomes but also to social outcomes.

3. PRIVATIZATION LAW The legal infrastructure for privatization implementations was actually laid with the Privatization Law 4046.

4. PRIVATIZATION LAW The Law 4046 brought about arrangements that also took into consideration the social effects of Privatization.

5. PRIVATIZATION LAW Keeping in mind the impact of privatization on employment, the most essential arrangements were those facilitated the amelioration of the potential negative effects of privatization on employment.

6. PRIVATIZATION LAW Looking at establishments that are in thescope of privatization and in the program of privatization, it can be seen that regarding the employees 82 % are not subject to transfers and 18 % are subject to transfers to other establishments.

7. EMPLOYMENT STRUCTURE Personnel type

8. EMPLOYMENT STRUCTURE Personnel Type Personnel subject to transfers

9. PRIVATIZATION LAW • Law 4046, • Arrangements regarding personnel subject to Civil Servants Law 657, contractual personnel and workers who are subject to Labor Law no. 1475. • B. Arrangements regarding the personnel who are working for a fee (subject to Labor Law) with service contracts.

10. PRIVATIZATION LAW • For the personnel in group A, Law 4046 arranges for; • them to be transferred to other public establishments during preparation for privatization or after privatization, • all financial entitlements to be paid out of the privatization fundduring transfer phase, • those that are connected to the Pension Fund agree to retire within two months of eligibility to retirement after the establishment has been taken into the privatization program receive their pension grants with a 30 % bonus.

11. PRIVATIZATION LAW • For the personnel in group B, Law 4046 arranges for; • The payment of “Job Loss Compensation” apart from those compensations that arise from the law or from their collective bargaining agreements.

12. OTHER MEASURES Apart from financial arrangements; obligations have been set for the private sector to employ a certain amount of personnel or give priority to those that have been made redundant due to privatization, keeping in mind the features of the region, the nature of the establishment and other criteria of the establishment that is being privatized.

13. PRIVATIZATION AND LABOR ADJUSTMENT POLICIES

14. Labor Adjustment Policies Labor Adjustment Program aimed to facilitate SOE restructuring by providing assistance to affected workers, enterprises and communities to shorten the duration of frictional and structural unemployment.

15. Labor Adjustment Policies Therefore, there was a need to put labor adjustment programs in place with a view to strengthen market orientation of local initiatives for economic and social development. This would assist in easing the social impact of SOE restructuring and would reduce both the political pressure and the risk of re-emergence of SOE employment after restructuring.

16. Labor Adjustment Policies For labor adjustment programs to succeed, it is required that there is a participatory process involving employers, labor and government representatives. It is also important to ensure that there are procedures for sufficient advance notice to workers.

17. Labor Adjustment Policies : World Bank Projects Two World Bank funded Projects Privatization Implementation Assistance and Social Safety Net Project (PIAL) (1994-1999) Privatization Social Support Project (PSSP) (2000+)

18. Labor Adjustment Policies : World Bank Projects The Labor Redeployment Services are paralel to the Labor Adjustment Project with regards to contents and the services rendered.

19. Labor Adjustment Policies : World Bank Projects Under the coordination of the Privatization Administration, it is being carried out by; Turkish Employment Organization (İŞKUR) the Small and Medium Scale Industry Development Agency (KOSGEB).

20. Labor Adjustment Policies : World Bank Projects • ‘Tripartite Advisory Committee’ • Union and employer representatives (TISK, TOBB, HAKİŞ, TÜRKİŞ) • Government institutions; (DPT, DİE, (Hazine) Treasury, KOSGEB, İŞKUR)

21. Labor Adjustment Policies : World Bank Projects • The specific services to be financed will seek to: • improve labor mobility and resolve frictional unemployment • enhance and change human capital to resolve structural unemployment and increase efficiancy via training. • address the lack of demand through micro and small businesses, and temporary community employment schemes

22. Labor Redeployment Services Employment Services - İŞKUR (through sub contracts at the local level) Labor services: Job/social counseling, provision of labor market information, aptitude/interest assesment, job serach/job club programs, labor exchange and placement services, relocation services, 2. Retraining services: Vocational and general education, literacy, formal small business skills training, 3. Temporary Community Employment Services: Environmental cleanup, refurbishment of public infrastructure, provision of assistance and support to social agencies.

23. Labor Redeployment Services KOSGEB SERVICES: (through sub contracts at the local level) 1. Small Business Assistance –KOSGEB Provision of services, including but not limited to: initial assesment of unemployed persons to start business, developing business plans, advising on accounting, financial legal, marketing and sales services issues, assistance in the dialogue with local authorities, short-term and other consulting services to unemployed enrepreneurs who started businesses during the past six months. 2. Small Business Incubators- KOSGEB Facilities rental, small business consulting services for tenants, shared support services and equipment for common use by incubator management and tenants.

24. Labor Redeployment Services Experiences in the past indicate that labor redeployment services should be sub-contracted on a competitive basis to local service providers who would deliver services on a performance contract basis to local service providers; contracts should include pre-negotiated job placement rates as appropriate with related financial incentives.

25. Our Policy For Turkey, privatization is an extreme necessity and priority even if it encompasses some difficulty. However, privatization should not only be viewed as an economic requirement, but also should be approached as a means for ameliorating all potential negativity and as something which spreads the capital to the foundations and thus creates better economic and social conditions.