Economists interpret the ups and downs of the unemployment rate of an economy not only in relation to the economic growth performance of that country but also as an important determinant of the balance of class power within that country. For instance, if unemployment rate goes up, workers’ bargaining power against the corporations decline, because the rise in the rate entails that the number of people willing to supply labor far exceeds the number of jobs available. This situation, everything else remaining constant, imposes a downward pressure on the average real wage rate. In other words, high rates of unemployment makes it possible for corporations to hire workers by offering them lower wages.
Therefore, unemployment rate is one of the most important indicators of the health of an economy. The unemployment rate is calculated by dividing the number of unemployed with the total labor force. Statistically speaking, for someone to be considered unemployed that person needs to be actively searching for jobs and therefore must be a part of the labor force. In other words, if a person is not working, he or she is not automatically considered unemployed.
The first table below tracks the seasonally adjusted unemployment rate since 2005. With the data available in January 2014, the average unemployment of last 10 years is 9.9%. In this period, the unemployment rate began to rise in early 2008 and with the global economic crisis it reached a peak during the second quarter of 2009 with 14.7%. Since 2012, the rate is stabilized around 9%. In the second quarter of 2015, there is an average of 3 million 96 thousand people who are unemployed.
It might be useful to compare the rate of unemployment with that of other OECD countries. After the global economic crisis and especially since 2009, Spain has entered into a deep economic depression and began to experience rates of unemployment that are over 20%. In contrast, the rate of unemployment in Turkey, while was rising prior to 2009, began to decline after 2009 until 2012 and stabilized around an average of 9%. While Spain is lifting the OECD average up, Germany is pulling it down. With 5.5% unemployment rate in 2012, Germany appears to be one of those economies least affected from the global economic crisis.
Some politicians and commentators claim that global economic crisis has barely touched Turkey. While making sense of this claim, it is necessary to specify the indicator used. In this case, the fact that the rate of unemployment has reached 14% suggests that the global economic crisis has made a substantial impact on the health of the economy.
Sources:
Unemployment dataset is downloaded from the website of Turkish Statistical Institute, “Labour Force Statistics” link.
Statistical Table: ”Seasonally Adjusted Main Labour Force Indicators”
Comparative dataset is downloaded from the OECD website, “Key Short-Term Economic Indicators” link.
Measure: “Harmonised Unemployment Rate”
Image: Nalan Yırtmaç
