‘Size of Unemployment Fund Can Overcome Covid-19 Crisis, But Planning is Necessary’

* Photo: AA

Click to read the article in Turkish

While new coronavirus (Covid-19) is swiftly spreading around the world, its economic consequences are still not certain.

With people isolating themselves at their homes and shops and businesses remaining closed as part of Covid-19 measures, this whole process is gradually leading to bankruptcy of companies and dismissal of employees around the world. It is not any different in Turkey.

While man opposition Republican People's Party (CHP) MP Utku Çakırözer calls on the government "to safeguard the rights of laborers" during the coronavirus outbreak, CHP Vice Chair Faik Öztrak says, "The salaries of those given an unpaid leave in private sector due to coronavirus should be partly paid from the Unemployment Insurance Fund and the duration of unemployment pays should be extended."

Peoples' Democratic Party (HDP) MP Muazzez Orhan has also submitted a motion to the Parliament and requested that the losses of pay, income and fund to be incurred by people as they cannot work during this process be fully compensated by the unemployment fund.

'Only one third of the fund paid to unemployed'

But, can the salaries of those who will be unemployed in this process and the losses to be incurred by shopkeepers be met by Unemployment Fund?

Sinan Ok, an Employment Expert discharged from the Turkish Employment Agency (İŞKUR), says that the size of the fund would suffice to overcome the Covid-19 crisis. However, according to Ok, the number of people who will become unemployed and the duration of their unemployment are important factors, so is the right planning for the fund.

Referring to the recent unemployment figures announced by the Turkish Statistical Institute (TurkStat), Ok reminds us that 4 million 394 thousand people are currently unemployed in Turkey while only 600 thousand can benefit from the Unemployment Fund.

Underlining that the fund is not properly used, Ok says:

"First of all, the target should be to give the unemployment fund to the unemployed. This fund is spent for several other purposes than unemployment, which is its most basic problem now.

"For instance, in 2019, a total of 36 billion Turkish Lira (TRY) was spent from the fund. 36 billion TRY of this amount was not spent as unemployment benefits. To put it differently, only 10 billion TRY was spent for the unemployed. The current size of the fund is over 130 billion TRY today.

'Legal regulation is necessary'

"There are motions submitted to the Parliament due to coronavirus, they discuss using this fund for the unemployment pay of those who lose their jobs in this period. If this will be the case, how long can so many unemployed people benefit from this fund? The number of people who become unemployed and the duration of their unemployment are important here.

"How many people will lose their jobs in this process? How much money will be paid to them? Will all unemployed people be paid from this fund? We cannot say anything without getting an answer to these questions. But, as far as I can foresee, it will be sufficient for a long time, considering the size of the fund and the amounts to be paid to people.

"The issue here is about legal regulations. Over 3 and a half million people cannot get unemployment pay due to legal restrictions. Because people can only get this pay if they have done contract labor for the last 120 days, paid premiums for 600 days in the last three years and - most importantly - they were not dismissed with their own will or due to their own faults.

'It can shoulder Covid-19 unemployment'

"Several unemployed people are already unable to get an unemployment pay for this reason. Employers dismiss people as if it was their own fault and millions of unemployed people cannot get their rightful due though their premiums come to naught.

"But it is important to remember that the source of this fund is workers' salaries. 14-15 million insured workers sustain this fund with 3-percent cuts from their monthly salaries. One percent of this is met by the worker, one percent by the employer and the remaining one percent by the state. But, all in all, this entire amount is cut from the salary of the worker.

"With the adoption of a suitable regulation, Unemployment Fund can shoulder the upcoming unemployment. Because we are talking about 130 billion TRY here.

"Besides, an unemployment pay is an income support in the event of unemployment. It is paid to you so that you can make a living for a while. The amount paid in Turkey does not suffice to build a life, but it aims to safeguard your living standards as you no longer have income.

Shopkeepers

"Another dimension of this issue is shopkeepers. A regulation called 'Ahi Fund' was introduced a few years ago and payments would be made from his fund as part of unemployment insurance as of 2020.

"However, they postponed it for a year by passing a omnibus law at the Parliament last week. If this fund was put into effect, the shopkeepers who pay their premiums under normal circumstances would benefit from this fund if they go bankrupt. They have been paying premiums for that for three years, but it has been postponed now.

'Public policies should be adopted'

"What needs to be done now is an urgent adoption of public policies. Because the medium- and long-term effects of the virus will be destructive. If necessary measures are not taken in due time, it will be devastating for people. Legal regulations should be introduced as soon as possible so that people will suffer the least harm from this destruction." (HA/SD)