5.8. SDG 8. PROMOTE SUSTAINED, INCLUSIVE AND SUSTAINABLE ECONOMIC GROWTH, FULL AND PRODUCTIVE EMPLOYMENT AND DECENT WORK FOR ALL Economic growth as the key component for development levels of countries impacts three dimensions of sustainable development directly or indirectly. Strong, inclusive and sustainable growth is dependent on long-term strategies, growth models appropriate to the country’s economic structure and policies that are implemented accordingly. Reducing the need for external finance by ensuring stability in the current accounts balance, strengthening internal finance by increasing domestic savings and increasing the share of direct foreign investments in primary deficit financing have positive impact on macroeconomic outlook. In a growing economy, it is essential to reduce unemployment through an increase in employment and decent work. Increasing the diversity of markets independently of cyclical developments in global trade that catapult protectionism to the forefront and the exports by quantity and quality will, on one hand, reduce the need for external resources in the economy to support macroeconomic stability, and lead the economy to a sustainable path of high growth on the other. POLICIES In addition to NDPs and strategic plans of relevant public institutions, key policy documents on SDG 8 include the Enhancing Productivity In Manufacturing Programme, Turkish Industrial Strategy Document , Productivity Strategy and Action Plan, SME Strategy Document, National Employment Strategy, Female Employment Action Plan, National Youth Employment Action Plan, National Programme on Combating Child Labour, Labour Market Efficiency Programme, 2023 Export Strategy and Istanbul International Finance Centre Programme Action Plan and Financial Access, Financial Education, Financial Protection of the Consumers Strategy and Action Plan, Tourism Strategy 2023 and Action Plan. The key components of the policy framework in line with SDG 8 are as follows: • Maintaining macroeconomic stability, • Increasing the share of private sector in the economy, • Strengthening the regulatory and supervisory functions of the state on economy, • Developing an outward oriented and competitive production structure, • Increasing the value-added and content of industrial technology in industry and increase the contribution of total factor productivity (TFP) in growth, • Transforming the manufacturing industry into a structure that employs highly qualified workforce, is responsive to the environment, accords importance to R&D, produces technology, creates design and brands, and provide subsidies towards these objectives, • Increasing productive investments, • Increasing capital productivity, • Increasing the production technology level and productivity of SMEs and their share in the industry value-added and facilitate their access to finance, • Making environmental management efficient, conserve the environment and use resources in a sustainable manner, • Increasing the efficiency of banking sector’s financial intermediation activities, • Developing capital markets and scale up insurance activities, • Increasing university-industry cooperation, • Supporting the establishment of technology development centres and technoparks, and increase R&D supports, • Increasing the tourism capacity of the country considering the social, cultural and environmental impacts of tourism, • Increasing labour quality and productivity, • Increasing decent work opportunities, • Increasing compatibility with occupational safety and health standards, develop inspection and incentive practices, • Strengthening the relationship between education and labour market, • Increasing the employment of all vulnerable groups especially women, youth and disabled people, • Combating child labour, -particularly the worst forms, • Promoting formal employment, • Increasing the efficiency of employment incentives and active labour market programmes, • Ensuring flexicurity in the labour market, 82 TURKEY’s 2nd VNR 2019 SUSTAINABLE DEVELOPMENT GOALS “Strong Ground towards Common Goals”
• Increasing the number and quality of job and vocational counsellors, • Easing the conditions of eligibility for unemployment insurance. LEGISLATION In 2016 and 2017, secondary legislation to R&D and Design Law, and Technology Development Zone (TDZ) Law and its secondary legislation were updated. In addition, there is legislation to promote the growth of SMEs and their access to finance. In Turkey, regulations on employment, wage equality between men and women, rights and professional rehabilitation of persons with disabilities taking sex, age and disability into account are at an advanced level with regard to the achievement of targets under SDG 8. Young people below a certain age are prohibited from employment and regulations are introduced on the safety and health of young workers to prevent negative effects on the development of young people who start the early working life, not to jeopardise their education and prevent economic exploitation. Turkey ratified the United Nations Convention on the Rights of the Child, Convention Concerning Minimum Age for Admission to Employment, Convention Concerning Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour, and put relevant regulations into effect. The regulations in our legislation are sufficient regarding all domestic and foreign migrant workers including women workers, those who are pregnant, nursing and having a new- born, and those workers at places which keep hazardous materials and/or doing heavy work. In the context of SDG 8.10, the banking legislation was passed in line with international regulations with a strong structure. There are many regulations that facilitate the strengthening of the capacities of domestic financial institutions to promote access to banking, insurance and financial services. The new Capital Market Law that entered into force in 2012 aims at creating alternative finance resources for companies building on post-global crisis experience and providing opportunities for financial intermediation sector to compete globally. With the purpose of increasing domestic savings rate, a state subsidy scheme was introduced at the beginning of 2013 for all participants benefiting from the Private Pension System (PPS). In addition to PPS, the automatic participation system in which participation was voluntary but encouraged by the state was put into practice on 1 January 2017. Accordingly, wage workers below age 45 are included in a pension plan by a pension contract. IMPORTANT DEVELOPMENTS AND IMPROVEMENT AREAS SDG 8 is assessed on two focus areas: i. Economic growth and ii. Employment. In the context of economic growth, following the 2001 crisis of Turkey, the banking sector was strengthened to augment financial liberalisation, and the state withdrew from production to concentrate on supervisory and regulatory roles. Areas such as energy, communications, education and healthcare were opened to private sector and competition, and structural transformation was achieved in agriculture as well. As a result of these financial, economic and legal transformations, important progress was achieved towards strong economic growth. There is regulation passed for more effective taxation, the main component of revenues of the public budget, used to finance sustainable development in Turkey. With a taxpayer-driven approach in the taxation system, practices that promoted production and growth were realised. Public revenues increased through facilities to those who had difficulties in paying tax obligations. It is necessary to increase productive investments and share of domestic resources in investment finance to increase the medium and long-term quality and quantity of growth. In the last period, external savings were used to finance the growing investment needs which eventually became an element of vulnerability for the national economy because this caused permanent current deficit. Therefore, new policies were developed to increase domestic savings. As a result of arrangements on PPS, 6.9 billion participants were in PPS as of 2018 end accumulating a total fund size (including state subsidy) of 87.9 billion TL (16.6 billion USD) at current prices. In the previous period, there were 5 million workers in the automatic participation system, and their fund size was 4.6 billion TL (0.9 billion USD) at current prices. 83 TURKEY’s 2nd VNR 2019 SUSTAINABLE DEVELOPMENT GOALS “Strong Ground towards Common Goals”
Starting from the early 2000s, on account of the structural reforms and global liquidity available, the ratio of current deficits to GDP and inflation decreased, and direct foreign investments increased resulting in an annual economic growth of 4.9% in the lead of private sector in 2000-2018. Following the global crisis, average GDP growth realized as 6.33% annually in 2010-2018. As a result of the positive effect of structural reforms, the national income per capita which was at 3,084 USD in 2001, reached to 9,632 USD in 2018. As a general productivity indicator, it can be observed that Turkey has achieved faster development in comparison with the world average in real GDP rate of increase per worker. When global development indicator levels were taken as a basis, the global economy achieved 2.25% average increase in GDP with adjusted fixed prices according to the purchasing power parity in 2000-2017, whereas this increase rate in Turkey was 3.01% on average.27 As of 2018 end, SMEs used 26% of the bank credits. However, the share of SMEs in R&D spending was 17.4% in 2014, and increased to 17.7% in 2015. There is need to strengthen SMEs to have stronger capacity to cope with globalization, benefit from qualified workforce, have sufficient capital, create innovative projects, develope partnerships and projects; and increase entrepreneurial capabilities and number of entrepreneurs. In the post-global crisis period, financial polices with strengthened efficiency were expanded to support employment, goods and services markets. In this context, measures and incentives were introduced in 2017 to increase the new labour. Financial support was provided to SMEs with credits secured by Credit Guarantee Fund (CGF), as well as tax discounts to construction and consumer durable goods sectors. With the new regulations of 2017, the technological content of the manufacturing industry was enhanced, and a series of additional measures and incentives were offered to support design and innovative activities. In addition, to facilitate the access of SMEs to finance, the scope of Credit Guarantee Fund’s guarantees was expanded, along with additional supports for export and employment. In 2013, the number of enterprises supported by Treasury-supported CGF was 1,263 and increased to 316,000. 27 http://databank.worldbank.org/data/reports.aspx?source=2&series=SL.GDP.PCAP.EM.KD&country=# In the period when the impact of globalisation was further felt, our country was able to increase its shares in the world manufacturing industry, rising to 16th rank in the world and 6th in Europe compared to 20th and 10th in 2002. With the objectives of improving the competitiveness, innovation and productivity in the industry, increase shares from global exports, producing predominantly high technology products, transforming the industry to one that has qualified labour force and is environmentally and socially sensitive; there are projects and programmes to increase domestic input rate that aim at cooperation between the businesses in the supply chain and increased value-added production. An example is the Clustering Support Programme that was introduced in 2012. There is still a need to strengthen the cooperation and clustering between manufacturing industry sectors to maximise benefits from the production capacities of sectors and increase the share of the domestic production in total value created. In 2018, with the objective of accelerating the digital transformation of industry, the Digital Transformation in Manufacturing Industry Roadmap was published. The roadmap specifies actions towards components such as development of technology and innovation capacity through education infrastructure, developing qualified labour force, strengthening data communication infrastructure and institutional governance, supporting national technology suppliers and encouraging users towards digital transformation. In 2016, comprehensive incentives were offered to investments that ensured supply security for products with insufficient production capacity, which developed technology capacity in areas with technology gap, reduced dependency to imports, had high value-added, ensured production with new generation technologies, were innovative and dependent on R&D, and were above 100 million USD.
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With the objective of developing entrepreneurship, start- up entrepreneurs are supported at 19 Business Incubators (ISGEM). Also, to foster the entrepreneurship culture and broaden its base, entrepreneurship training is offered at several levels and related supports are offered. The share of the revenues derived from tourism in Turkey in the global tourism revenues increased to 6% in 2014 from 1.3% in 2000. Tourism being a labor intensive sector it has high employment generation capacity. There are ongoing efforts to diversify Turkey’s tourism products and extend the tourism season over the entire year, raise awareness in private sector and NGOs in eco-tourism, rural tourism and agro-tourism, and solve the infrastructure and environmental problems at locations with high-intensity tourism with the contributions from local administrations and private sector. In line with SDG 8.a, Turkey contributed 1 million USD in 2010 to Enhanced Integrated Framework that was provided for LDCs to play a more active role in global commerce. In addition, it organised training programmes on WTO for public officials from Tajikistan, Cambodia, Ethiopia, Cameroon, Palestine and Iraq. In the context of employment as a focus area, employment incentives were diversified in 2014-2018 supporting employers to create more jobs. Regulations were implemented for flexible working conditions, resources allocated for active labour market programmes, and people benefitting from these programmes were significantly increased. In 2014-2017, the total employment increased from 25.9 million to 28.2 million. The service sector was decisive in employment rate increase. 85 TURKEY’s 2nd VNR 2019 SUSTAINABLE DEVELOPMENT GOALS “Strong Ground towards Common Goals”