In addition to weak demand and increasing cost pressure, the loss of markets for low value-added products was also reflected in industrial employment. Employment losses in the industrial sector accelerated in the third quarter of this year. According to the labor market report of the Presidential Strategy and Budget Presidency, despite a limited increase in industrial production in the July-September period of this year, seasonally adjusted employment in the sector decreased by 226 thousand people compared to the previous quarter.
According to the “Macro Analysis of Developments in the Labor Market, 3rd Quarter 2023” report, while employment increased in services, construction and agriculture sectors, it decreased only in industry. Analyzing the contribution of sectors to total net additional employment on a quarterly basis, 278,000 of the quarterly employment increase came from services, 42,000 from construction and 30,000 from agriculture, while industrial employment made a negative contribution with a decrease of 226,000. In addition, while total employment increased by 883,000 compared to the same quarter of the previous year, industrial employment decreased by 12,000.
The share of industry in total employment was measured as the lowest level of the last 12 quarters. According to seasonally adjusted data, the share of industry in employment fell to 20.8 percent in the 3rd quarter of 2023, the lowest level since the 4th quarter of 2020, the year of the pandemic, that is, in the last 12 quarters. In this period, the share of agriculture in employment was 14.8 percent, while the share of services in employment reached 64.4 percent.
According to TurkStat data, the unemployment rate was realized at 9.3 percent in the third quarter of 2023, while the labor force participation rate increased to 53.9 percent in the same period with a limited improvement from 53.5 percent in the same period last year. In the same period, the employment rate rose to 48.9 percent from 48.1 percent in the third quarter of last year, with a similar limited improvement.
Low pace of value-added growth suppresses productivity
The report also analyzes partial labor productivity developments across sectors. Accordingly, it is observed that the strong upward trend in industrial sector productivity since the second half of 2020 started to decline as of the third quarter of 2021 and remained low despite the limited improvement in the last quarter. Regarding this issue, the report states, “The strong upward trend in industrial sector productivity since the second half of 2020 has been interrupted as of the third quarter of 2021, as employment growth has been stronger than value added growth in the post-pandemic recovery period.”
Labor force participation rate of university graduates at 29.6 percent
The same report looks at the basic indicators of the labor market by education sub-divisions. Accordingly, in the third quarter of 2023, the unemployment rate of those with less than high school education, which has the highest share in the total labor force with 43.4 percent, was 7.3 percent. While the share of higher education graduates in the total labor force was 29.6 percent, the unemployment rate at this level decreased by 1.4 points compared to the same quarter of the previous year and fell to 10.7 percent.
Early retirement regulation reduced labor force participation
In the third quarter of 2023, seasonally adjusted labor force participation rate decreased by 0.1 points quarter-on-quarter to 53.4 percent. The report stated that the limited decline in the labor force participation rate was attributed to the “temporary effect of the arrangements made regarding retirement”. Labor force participation rate remained unchanged at 35.9 percent for women and decreased by 0.3 points to 71.2 percent for men.
