oecd meeting 10-11 october 2002, İstanbul social dimension of privatization in turkey:

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OECD MEETING

10-11 October 2002, İstanbul

Social Dimension of Privatization in Turkey:

Employment and Labor Adjustment Policies

M. Hakan YILDIZVice President, PA

REPUBLIC OF TURKEYPRIME MINISTRY

PRIVATIZATION ADMINISTRATIONwww.oib.gov.tr

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

PRIVATIZATION LAW

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The legal infrastructure for privatization

implementations was actually laid with

the Privatization Law 4046.

PRIVATIZATION LAW

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The Law 4046 brought about arrangements that

also took into consideration the social effects of

Privatization.

PRIVATIZATION LAW

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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.

PRIVATIZATION LAW

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Looking at establishments that are in the scope 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.

PRIVATIZATION LAW

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EMPLOYMENT STRUCTURE

4

10

4

61

21

0

10

20

30

40

50

60

70

Civil Servants Subj

to Law 657 (subj.

to transfer)

Contractual

Workers (subj. to

transfer)

Workers Subj. to

Labor Law 1475

(subj. to transfer)

Permanent Workers

(not subj. to

transfer)

Temporary

Personnel (not

subj. to transfer)

% GRAFİK 1

Personnel type

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EMPLOYMENT STRUCTURE

Personnel Type

18

82

0

10

20

30

40

50

60

70

80

90

%

1 2Personnel not subject to transfersPersonnel subject to

transfers

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PRIVATIZATION LAW

Law 4046,

A. 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.

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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 fund during 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.

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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.

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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.

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PRIVATIZATION AND LABOR ADJUSTMENT POLICIES

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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.

Labor Adjustment Policies

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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.

Labor Adjustment Policies

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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.

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Labor Adjustment Policies : World Bank Projects

Two World Bank funded Projects

I. Privatization Implementation Assistance and Social Safety Net Project (PIAL) (1994-1999)

II. Privatization Social Support Project (PSSP) (2000+)

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The Labor Redeployment Services are

paralel to the Labor Adjustment Project

with regards to contents and the services

rendered.

Labor Adjustment Policies : World Bank Projects

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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).

Labor Adjustment Policies : World Bank Projects

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‘Tripartite Advisory Committee’

Union and employer representatives

(TISK, TOBB, HAKİŞ, TÜRKİŞ)

Government institutions;

(DPT, DİE, (Hazine) Treasury, KOSGEB, İŞKUR)

Labor Adjustment Policies : World Bank Projects

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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

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Labor Redeployment ServicesEmployment Services - İŞKUR

(through sub contracts at the local level)

1. 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.

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Labor Redeployment ServicesKOSGEB 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.

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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.

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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.