Labor_and_Employment_Relations_in_a_Globalized_World_New_Perspectives

196 P. Falcıog˘lu aims of this book because they lead to results and consequently to implications to be used in the distribution of earnings and employment of the workforce. Therefore the aim of this chapter is to review the recent empirical literature on the changing demand for labor skills and the reasons of the observed change, especially on the labor skills demanded in knowledge based global economy. 9.2 Direction and Scope of Change in Labor Skills In the empirical literature labor skills are studied in a wide variety of dimensions. In order to make right evaluations about the causes and consequences of the change in trends and to make meaningful comparisons, empirical studies have disaggregated labor skills into many different categories such as; motor skills (physical strength, motor coordination), interactive skills (ability to relate between working people during negotiation, instruction, supervision etc.), cognitive skills (ability to create knowledge), managerial skills, verbal and language skills and analytical skills (mathematical and logical reasoning abilities). Studies have also chosen to differ- entiate between skilled and unskilled labor either based on the education level (Blankenau and Cassou 2011; Machin and Van Reenen 1998; Acemoglu 2002; Cazzavillan and Olszewski 2011) or based on skill categories such as manual, non manual workers (Betts 1997; Berman et al. 2005). A summary of the skills investigated in each empirical study is given in Appendix. One of the main trends in the developed country labor market starting from the 1980s is that the earnings and number of highly skilled workers have increased relative to those of less skilled workers. In US during the 1950–1990 period highest change is observed in the demand for synthesizing, coordinating, analyzing skills of labor besides increases in interactive skills, mathematical, language and reasoning skills and years of education (Wollf 1995). Only the demand for motor skills declined which has been accepted as the criteria of deskilling in most of the studies. Complementing these findings for the period of 1960–1998 in US, in the study of Autor et al. (2003) it has been proved that computer technology substitutes for workers performing routine tasks, while it complements workers executing nonroutine tasks. Extending the timeline to 1968–2006 period, Blankenau and Cassou (2011) conducted a study based on industry differences for the US case, the industry based study confirmed that the direction of change is the same for all industries but the pace varies across industries. The most rapid changes are expe- rienced in the skilled services and manufacturing industry while unskilled services such as agriculture, experienced the least. Therefore, in a time period of approxi- mately 50 years in the US, the demand for skilled workers has increased due to their comparative advantage in nonroutine tasks which demand mostly skills in commu- nication and coordination. As in US, there has been a similar upskilling in UK and France in the 1990s. In both of the countries the earning share of the most skilled group (managers) rose and the share of the least skilled group (unskilled manual workers) declined (Caroli

9 The New Labor Skills in the New Economy 197 and Van Reenen 2001). In the Australia cases by Kelly and Lewis (2003, 2010) studies also confirm that the demand for motor skills declined while the demand for interactive skills, cognitive skills and education increased. Concerning the effects of growth in part time work, study of Kelly (2007) reveals that between 1991 and 2001 there has been an increase in the skills of the full-time workforce in the Australian economy whereas the skills of the part-time workforce remained largely unchanged. Again in the study of Kelly and Lewis (2010) motor skills of the part- time workforce increased unlike the fulltime workforce. Over the 1997–2006 period in UK, Green (2012) proves that the demand for communication skills, interactive activities especially literacy and self-planning skills increased quite rapidly compared to numerical and problem-solving skills whereas the demand for repetitive physical skills has remained unchanged. The literature provides empirical evidence based on longitudinal data for devel- oping countries as well. In the study of Berman et al. (2005) based on the case of India, simultaneous increase in the proportion and wage of unskilled workers has been explained as the result of increase in the demand for unskilled workers in the 1990s. Again in Columbia the share of skilled workers has increased substantially in every industry (Attanasio et al. 2004). As a result of the discussion so far, it can be stated that the pattern and direction of labor skill changes have been well documented both for developed countries and developing countries and more importantly the findings are consistent with each other. Besides the increasing gap between skilled workers and less skilled workers, another major trend in the observed period has been the penetration of computers and information technology into organizations after the 1980s which has caused researchers to question technological change as a determinant in the changing demand for skilled labor. In some of the empirical studies R&D intensity (Machin and Van Reenen 1998, Berman et al. 2005) in some, diffusion of computers (Autor et al. 2003; Caroli and Van Reenen 2001) has been taken as the medium of technological change. Many studies have found positive correlations between the increase in the use of technology and the use of more skilled labor in production and have identified technological change as a determinant in the increase in high skill demand which mainly constitutes the discussion in the next part. 9.3 Reasons of Change 9.3.1 Technological Change Findings of recent empirical studies reveal that one of the main reasons for the increase in demand for highly skilled workers has been skill-biased technological change. Skill-biased technological change (SBTC) hypothesis supports that tech- nological change causes the productivity of high skilled workers to increase more

198 P. Falcıog˘lu than it does for the productivity of less skilled workers. The literature provides many longitudinal empirical studies for the skill-biased technological change hypothesis particularly for developed countries but in recent years there have been studies from developing countries as well. Evidence of skill-biased techno- logical change has been provided recently by Acemoglu (2002), Autor et al. 2003 and Blankenau and Cassou (2011) for the US case, by Kelly and Lewis (2010) for the Australian case, Maurin and Thesmar (2004) for the French case, among many others. Studies have been summarized in Appendix. In the study of Acemoglu (2002) it has been concluded that the period between 1940 and 1960 in US has been characterized by skill-biased technical change. Kelly and Lewis (2010) have studied the Australian case, in order to reveal the effect of different phases of the business cycle in the change process. It has been stated that the post-recession period was characterized by skill changes resulting from struc- tural change whereas in the recovery and boom periods technological change was the main effect on change in skills. In Wollf (1995), the relationship between computerization and demand for more complex skills was only significant in manufacturing industries. The rate of com- puterization has a positive effect on the change in interactive skills and the ratio of computer specialists and engineers to employment has a very significant negative relation to motor skills change (Wollf 1995). In Caroli and Van Reenen (2001) the introduction of computers into the plant results in a fall in the proportion of unskilled manual workers. Similarly, in a more recent study (Englehardt 2009) it has been evidenced that after the 1990s there has been a decrease in the correlation between computer share and software share in US. This finding has been accepted as an evidence of computer support for the production workers which led to improvement in their productivity. Contrary to the findings of the studies that conform the skill-biased technological change hypothesis, Card and DiNardo (2002) and Beaudry and Green (2005) find contradicting evidence for the U.S. labor market while Perugini and Pompei (2009) state the same contradiction for EU countries. In the study of Card and DiNardo (2002) it is stated that there is weak evidence in linking the rising wage inequality in US to SBTC hypothesis. Examining the determinants of changes in the wage structure of US over the period 1976–2000, Beaudry and Green (2005) find that changes in the ratio of human capital to physical capital explain most of the variation, meaning skill intensive organizations have a higher capital labor ratio. It is claimed that this pattern conforms well to a simple model of technological adoption following a major change in technological opportunities and does not support the SBTC hypothesis. Supporting this finding, in the study of Perugini and Pompei (2009) evidence reveals that the impact of the SBTC on earnings dispersion is due to a temporary shock, in the beginning skilled labor demand increases as a result of new technologies and when it is not met by enough supply, it causes wage differentials to widen but later supply catches up with demand. The results are consistent for all manufacturing industries (high-, medium- and low-tech sectors) and two services industries (financial, real estate and business services) in 14 EU countries between 1995 and 2001 (Perugini and Pompei 2009).

9 The New Labor Skills in the New Economy 199 From another perspective, in a more recent study, gender biases have been evidenced related with technology skill complementarities, by Lindley (2012) in the UK labor market between 1997 and 2006. The increase in the demand for skilled workers had a male bias in highly computer used sectors, such as finance and machinery manufacturing. Supporting the age-biased technical change theory, Behaghel and Greenan (2010) find that firms implementing advanced information technologies do not demand older workers for low-skill occupations due to their low computer skills and teamwork skills. As for developing countries, increased demand for non-manual workers in Indian manufacturing is largely explained with three factors in the study of Berman et al. (2005); increased capital skill complementarities, increased investment and increased output. The first two are interpreted as consistent with the idea of skill- biased technological change whereas the increase in output is interpreted as a result of industrial structure, for instance fast growing industries are faster in upgrading their skill mix than slow-growing or stable industries. Cazzavillan and Olszewski (2011) have compared US and Poland, a transition country and a developed country in the same study and showed that skill-biased technological change can explain the observed increase of unemployment of unskilled workers in both countries. In Meschi et al. (2011) results support the skill-biased technological change argument in the case of Turkey. Although the pattern and direction of labor skill changes have been well documented both for developed countries and developing countries, results on the skill-biased technological change hypothesis have not been that much varied for developing countries and not so confirming for developed countries. Still, in overall terms, majority of the empirical studies confirm that technological change causes the labor carrying out routine tasks to be substituted but favors the labor performing non-routine tasks. Studies also reveal that empirical evidence supporting skill biased technology is widespread and can be found in nearly for every industry, for every country, all suggesting that in overall terms skill biased technological change is a worldwide phenomenon. Besides the two big trends discussed so far, another trend observed after the 1980s has been the knowledge-based economic development. Many studies have found positive correlations between the increase in the use of new work practices of the knowledge-based economy and the requirement for more skilled labor, partic- ularly in production. The next part discusses organizational change as another determinant of the skill change process. 9.3.2 Organizational Change in the Knowledge-Based Economy The knowledge-based economy provides a challenging human development con- text for organizations. As a result of the rapid infusion of technology into everyday

200 P. Falcıog˘lu business practices, organizations found themselves in a complex and fast changing business environment where they have to make faster decisions with more infor- mation. In response to the dynamics of change and complexity in the new business environment, business organizations changed the way they use their resources and redefined their work practices. Most commonly applied new work practices have been decentralization, team work and multi-tasking. Decentralization of authority means less hierarchy, less formal control for the organization and more self control, more responsibility, more communication for the employee. As a result, the employee is expected to have better decision making skills, team work skills and communication skills. Therefore, another stream of discussion is on the effect of new management practices and organizational forms in increasing the need for skilled labor and the kind of new skills demanded as a result of the modern work practices. In this line of literature new technology is accepted as a facilitator in the organizational change process, not a dominant factor. Increase in the usage of computers is accepted as only a part of the reorganization efforts of the organizations in developing new work practices in the study of Bresnahan et al. (2002) accepting technological change, organizational change and skills as joint determinants of firm performance. “Skill-Biased Organizational Change” means that new types of organizational changes help the skilled workers more than they help unskilled workers with their works (Caroli and Van Reenen 2001). In the empirical literature new work practices are investigated in a wide variety of dimensions as a part of organizational change process and there is plenty of recent empirical evidence in the literature consistent with the “Skill-Biased Organizational Change” hypothesis. Studying the correspondences between the revolution in the organization of production and the computer revolution, Snower (1998) supports that the new organization requires the use of high performance production techniques that necessitates workers to respond quickly to customers, to interact with other workers in order to solve problems, requiring a high level of skill in decision making, communication, teamwork and problem solving. The study further explains that as a result of companies’ incapability in developing the necessary organizational structures facilitating the introduction of new technologies, huge investments in computers have failed. Similarly, in another study again based on computerization, it has been revealed that computers allow for certain organizational changes such as the decrease in the number of management hierarchies (Bresnahan et al. 2002). Gale et al. (2002) also find a relation between new organizational practices in manufacturing industries and some skill requirements such as basic math, basic reading, interpersonal communication, problem-solving and computing. The findings of Maurin and Thesmar (2004) confirm these studies in a different way. Findings claim there is a misconception that technology favors the substitution of complex activities for simple activities but instead the main effect of new technology is that it changes the nature of the work activities. The idea is supported by the shift from production and administrative activities towards sales/marketing and conception/development activities.

9 The New Labor Skills in the New Economy 201 A few studies have analyzed the joint effect of both new technologies and work practices on skills (Caroli and Van Reenen 2001; Bresnahan et al. 2002; Piva et al. 2005; Kelly and Lewis 2010). In the study of Caroli and Van Reenen (2001) empirically it is proved that organizational changes such as decentralization of authority, decreasing the number of layers of managerial hierarchies and increased multitasking increase productivity whereas technology is not able to increase productivity without the appropriate organizational and skills infrastruc- ture. This finding supports the idea that new organizational practices raise produc- tivity only if the firms already have complementary assets that support new technology. Supporting the same finding, in Green (2012) communication skills and interactive activities are found to be among those that increased quite rapidly over the 1997–2006 period in England as a result of the increase in employee involvement practices such as meetings and suggestion schemes which require the use of literacy and other communication skills, regardless of the changes in technology. This finding differentiates the study from the other cases because employee involvement is regarded as an independent and additional factor of change. Therefore, contrary to the other studies supporting that new technology is a facilitator in the organizational change process instead of a dominant factor, these studies prove that the effect of organizational change cannot be explained simply through its correlation with technological change, it has an independent role. Bresnahan et al. (2002) identify neither technological change nor organizational change as a cause but argue for complementarities between technological changes, organizational changes and skills. Supporting the idea, people skills or interactive skills are determined as the critical parts of the new form of information and communication technologies enabled production as stated in the study of Kelly and Lewis (2010). Information and communication technologies enable different organizational forms that favor lateral communication and coordination. Related with such work organization, increased autonomy usage is required and such a change in the mode of supervision also requires different skills which are critical to the change process. In the empirical literature skill upgrading is also explained by other factors related to the globalization process, such as trade liberalization, international technology spillovers and decline in unionization which will be discussed in the next part. 9.3.3 Globalization Effects For developed countries, globalization means increased world trade with develop- ing countries. In the developed country in terms of the labor, globalization leads to unemployment in the import-competing sector and also leads to decrease in the rate of unemployment in the export sector (Moore and Ranjan 2005). Moreover, outsourcing practices of companies have effects on skill composition of countries, especially those of developed countries which outsource the most unskilled labor

202 P. Falcıog˘lu intensive production developing countries. Due to cheap unskilled labor the relative demand for skilled workers increase in developed countries. Despite these consid- erations, empirical studies that have examined whether increased international trade has any effect on the increase in skill demand in developed countries have proved either for little effect of international trade, as in Sweden (Hansson 2001) or no effect of international trade as in US (Acemoglu 2002). From the viewpoint of developing countries, studies prove that after trade liberalization, income inequality between skilled and unskilled workers has increased in countries such as Mexico, Chile and Turkey (Hanson and Harrison 1999; Revenga 1997; Pavcnik 2003; Meschi et al. 2011). Hanson and Harrison (1999) explored the impact of foreign direct investment and adoption of new technology on skill upgrading for Mexico and have found that firms receiving FDI and technology through licensing agreements and import materials demand skilled workers. Attanasio et al. (2004) also provide evidence that imported tech- nology adoption and trade are related to skill upgrading in Columbia. In the Turkey case, Meschi et al. (2011) have proved that during liberalization process the relative demand for skilled labor increased substantially. The analysis also reveals that the increase was mainly due to within-sector skill upgrading and R&D expenditures were significantly related to skill upgrading. These results support the skill biased technological change argument in the case of Turkey during trade liberalization. Studies on the relation between skill biased technological change and trade liberalization have stated that skill biased technological change process is reinforced by growing trade integration because it accelerates the rates at which new technologies are adopted (Wood 1995). Berman et al. (2005) and Meschi et al. (2011) state that imports from industrialized countries cause the transfer of new technologies leading to a higher demand for skilled labor in developing countries. Conte and Vivarelli (2011) confirm that technology transfer from high- income countries to low income countries results in a greater employment divide between low and middle income countries. Whereas, in the study of Pavcnik (2003) technology changes were not found to be associated with increases in demand for skilled labor in Chilean plants adopting foreign technology after trade liberalization. Knowledge based economy, in the form of larger R&D, physical capital and knowledge expenditures, has been studied as another factor that may have acceler- ated the effect of technological changes. Hansson (2001) has proved that knowl- edge capital and skilled labor are relative complements and international technology spillovers have effect on the relative demand for skills. In Machin and Van Reenen (1998) significant association between skill upgrading and R&D intensity has been found in all 7 OECD countries regardless of the economic conditions of countries. Change in labor market institutions, particularly the decline in unionization in the literature has been seen as a consequence of globalization (Dumont et al. 2012), the skill biased technological change (Acemoglu et al. 2001; Acemoglu 2002) and organizational change (Caroli and Van Reenen 2001), all reducing the bargaining

9 The New Labor Skills in the New Economy 203 power of low-skill workers. In terms of organizational change, union strength and being in the public sector appear to have a negative correlation with organizational changes implemented (Caroli and Van Reenen 2001). The percent of employees in unions has a negative and significant effect on the change in interactive skills, by retarding the substitution of higher skilled workers for lower skilled workers in US. There is also a positive and significant effect on the growth in motor skills among all industries, by supporting craft workers and operative jobs (Wollf 1995). Complementing these findings, it has also been identified that one of the impedi- ments to multiskilling of the labor force is that some unions show adverse reaction to multiskilling labor strategies (Haas et al. 2001). In a recent study on the effect of globalization on unions, Dumont et al. (2012) have found that the bargaining power of low-skilled workers decline, whereas that of the high-skilled remain constant in Belgium. At the same time, import compe- tition from low-wage countries has a statistically significant negative effect on the bargaining power of low-skilled workers in Belgium whereas the bargaining power of non-manual workers is not affected by internationalization. Another striking trend characterizing the globalized world over the last century has been increasing urbanization. The spatial distribution of populations across urban and rural areas has also been studied as a factor in the labor market in relation with labor skills. The literature studying urban labor markets has demonstrated that, although workers in cities earn higher wages than workers with the same skills living outside of cities, the estimated premium is higher for workers with higher skills in cities (Glaeser and Mare 2001). Complementing this finding, in the study of Wheeler (2005) it is stated that urban areas are places studied in relation with skill- biased technological change due to higher skill returns in urban areas. 9.4 Discussion and Conclusion This chapter defines the scope and direction of change in labor skills and explores the reasons of the growing demand for skilled labor in the empirical literature. In the last 30 years a dramatic change has been observed in the supply and price of skilled labor relative to unskilled labor. Over the same years, computers and information technology developed rapidly, many developing countries liberalized their trades, and companies started implementing new work organizations to increase their productivity. Researchers found themselves in a new work area where they should study the relation between each of these effects. As the result of years of empirical research the main reasons of the observed change in skill change have been identified as interactions of technological change, new work practices and globalization. It seems to be that all the reasons are here to stay, as the gap between skilled and unskilled labor increases what can be done for the unskilled labor force and what does the future hold for them? Would increasing trade barriers to protect the domestic unskilled labor help? What if governments or companies increase chances

204 P. Falcıog˘lu of better education and training for workers? Won’t some of the workforce always be more skilled? Is it possible to fill the gap through training when the only competitor of unskilled labor is not the skilled labor but technology, knowledge and capital? What should the developing countries learn from the experiences of developed countries? The answers to these questions lead to implication advices both for firms and governments. In terms of governmental implications, human resource needs of businesses should shape general education policies. Especially for developing countries where technology transfer is a major determinant of economic growth, general education policies play a strategic role. Studies state that new working environment changes require the workers to have general and adaptable skills rather than specific competencies. In the literature it has been supported by Bresnahan et al. (2002) that general education should also deliver a number of non-cognitive skills, such as interpersonal skills, ability to work autonomously, ability to influence subordinates. As Lorenz and Lundvall (2011) have put it, broad competence-based education systems are associated with higher levels of creative work. In terms of managerial implications, at the firm level top management should support utiliza- tion of different types of education, such as on the job and off the job training. Therefore further research is needed to explore whether formal training or general education or vocational education should be utilized to fill the gap between skilled and unskilled workers, as well as whether and to what extend such efforts should be coordinated by government, education or industry institutions. References Acemoglu D (2002) Technical change, inequality, and the labour market. J Econ Lit 40:7–72 Acemoglu D, Aghion P, Violante GL (2001) Deunionization, technical change and inequality. Carnegie-Rochester Conf Ser Public Policy 55:229–264 Attanasio O, Goldberg P, Pavcnik N (2004) Trade reforms and income inequality in Colombia. J Dev Econ 74:331–366 Autor DH, Levy F, Murnane RJ (2003) The skill content of recent technological change: an empirical exploration. Q J Econ 118:1279–1333 Beaudry P, Green D (2005) Changes in U.S. wages, 1976–2000: ongoing skill bias or major technological change? J Labor Econ 23:609–648 Behaghel L, Greenan N (2010) Training and age-biased technical change. Ann Econ Stat 99 (100):317–342 Berman E, Somanathan R, Tan HW (2005) Is skill-biased technological change here yet? Evidence from Indian manufacturing in the 1990’s. Ann Econ Stat 79(80):299–321 Betts JR (1997) The skill bias of technological change in Canadian manufacturing industries. Rev Econ Stat 79:146–150 Blankenau WF, Cassou SP (2011) Industry estimates of the elasticity of substitution and the rate of biased technological change between skilled and unskilled labor. Appl Econ 43:3129–3142 Bresnahan T, Brynjolfsson E, Hitt L (2002) Information technology, workplace organization, and the demand for skilled labor. Q J Econ 117:339–376 Card D, DiNardo JE (2002) Skill-biased technological change and rising wage inequality: some problems and puzzles. J Labor Econ 20:733–783

9 The New Labor Skills in the New Economy 205 Caroli E, Van Reenen J (2001) Skill-biased organizational change? Evidence from a panel of British and French establishments. Q J Econ 116:1449–1492 Cazzavillan G, Olszewski K (2011) Skill-biased technological change, endogenous labor supply and growth: a model and calibration to Poland and the US. Res Econ 65:124–136 Conte A, Vivarelli M (2011) Imported skill biased technological change in developing countries. Dev Econ 49:36–65 Dumont M, Rayp G, Willeme´ P (2012) The bargaining position of low-skilled and high-skilled workers in a globalising world. Labour Econ 19:312–319 Englehardt SJ (2009) The evolution of skill-biased effects on American wages in the 1980s and 1990s. J Labor Res 30:135–148 Gale H, Wojan TR, Olmsted JC (2002) Skills, flexible manufacturing technology, and work organization. Ind Relat 41:48–79 Glaeser EL, Mare DC (2001) Cities and skills. J Labor Econ 19:316–342 Green F (2012) Employee involvement, technology and evolution in job skills: a task-based analysis. Ind Labor Relat Rev 65:36–67 Haas CT, Rodriguez A, Glover R, Goodrum PM (2001) Implementing a multiskilled workforce. Construct Manag Econ 19:633–641 Hanson G, Harrison A (1999) Who gains from trade reform? Some remaining puzzles. J Dev Econ 59:125–154 Hansson P (2001) Skill upgrading and production transfer within Swedish multinationals in the 1990s. FIEF working paper series no. 166 Trade Union Institute for Economic Research, Stockholm Kelly R (2007) Changing skill intensity in Australian industry. Aust Econ Rev 40:62–79 Kelly R, Lewis P (2003) The new economy and demand for skills. Aust J Labour Econ 6:135–152 Kelly R, Lewis P (2010) The change in labor skills in Australia over the business cycle. Aust Bull Labour 36:260–277 Lindley J (2012) The gender dimension of technical change and the role of task inputs. Labour Econ 19:516–526 Lorenz E, Lundvall B (2011) Accounting for creativity in the European Union: a multi-level analysis of individual competence, labour market structure, and systems of education and training. Camb J Econ 35:269–294 Maurin E, Thesmar D (2004) Changes in the functional structure of firms and the demand for skill. J Labor Econ 22:639–664 Machin S, Van Reenen J (1998) Technology and changes in skill structure: evidence from seven OECD countries. Q J Econ 113:1215–1244 Meschi E, Taymaz E, Vivarelli M (2011) Trade, technology and skills: evidence from Turkish microdata. Labour Econ 18:60–70 Moore MP, Ranjan P (2005) Globalisation vs skill-biased technological change: implications for unemployment and wage inequality. Econ J 115:391–422 Pavcnik N (2003) What explains skill upgrading in less developed countries? J Dev Econ 71:311– 328 Perugini C, Pompei F (2009) Technological change and income distribution in Europe. Int Labor Rev 148:123–148 Piva M, Santarelli E, Vivarelli M (2005) The skill bias effect of technological and organisational change. Evidence and policy implications. Res Pol 34:141–157 Revenga A (1997) Employment and wage effects of trade liberalization: the case of Mexican manufacturing. J Labor Econ 15:20–43 Snower DJ (1998) Causes of changing earnings inequality in income inequality; issues and policy options a symposium sponsored by the Federal Reserve Bank of Kansas City, pp 69–133 Wheeler CH (2005) Cities, skills and inequality. Growth Change 36:329–353 Wollf NE (1995) Technology and the demand for skills. Levy Economics Institute working paper no. 153. Available at SSRN: http://ssrn.com/abstract¼116308 or http://dx.doi.org/10.2139/ ssrn.116308 Wood A (1995) How trade hurt unskilled workers. J Econ Perspect 9:57–80

Chapter 10 Public and Private Initiatives in Skills Training in Turkey Y.Pınar Soykut-Sarıca Abstract The priorities 9th National Development Plan (NDP) covering the 2007– 2013 period relevant to HRD-OP (Human Resources Development Operational Programme) involve supporting the priority of “increasing employment” which includes improving the employability of the target groups and strengthening the capacity of public employment services. The chapter reviews several training programmes which are offered by unions to their members. An important venture in this area is the joint MESS (Metal Employers’ Association of Turkey) and Tu¨rk Metal (Metal Workers’ Union of Turkey) project whose main objective is to provide a mechanism for continually improving the productivity and competitive- ness of the metal industry as well as to provide ongoing skills development for employees. 10.1 Introduction Issues regarding work life have been affecting a large section of society as a result of economic and social improvements in the country. It is no doubt that among the factors affecting employment policies, new technological developments, globali- zation, competition and flexibility all function as interacting parts of the same process. Due to changes in technology, the nature and organization of businesses undergo changes which affect jobs and workers. The worsening state of the current economic crisis, the increase in unemployment and the expansion in social exclu- sion and poverty all prompt the search for solutions in the interest of society. The shrinkage of privatizations by the public sector and other developments during the globalization process, as well as the lack of solutions for increasing problems within the current structure of the public sector, all put a new economic, social Y.P. Soykut-Sarıca (*) 207 Department of Management, Is¸ık University, Istanbul, Turkey e-mail: [email protected] T. Dereli et al. (eds.), Labor and Employment Relations in a Globalized World, Contributions to Economics, DOI 10.1007/978-3-319-04349-4_10, © Springer International Publishing Switzerland 2014

208 Y.P. Soykut-Sarıca and political approach on the agenda, which is called “social economy,” or, the “third system”. Within this context new structures have been formed first in Europe through local, regional, national and European-wide collaborations, which have yielded positive improvements. The system has played an important role in pro- viding the bottom up approach in the pluralistic democracy. With the force that is obtained here, a new process which concentrates on social needs and creating job opportunities, has been started. The “third system” is being developed through the partnership and cooperation of the public sector, local managements, unions and private companies in order to achieve the permanence and efficiency of the coop- eration. This process does not progress easily but it is acknowledged that the organizations created through this system present a great potential. Despite the fact that we are experiencing a period of rapid growth and improve- ments globally, threats are still valid even for developed countries. Europe was directly affected after the 2008 economic collapse and is now trying to recover, but uncertainties still remain in today’s global environment. Unemployment rates are high and effects of the crisis emphasize the need to start efforts to improve economies and societies. Today, industrial strategies have become even more significant as it is generally acknowledged that they are tools facilitating the adjustment process in terms of accelerating the integration of the national econo- mies with the global economy (Rodrik 2006). Improvement in the quality and availability of information about the labor market and relocation allowances sup- plied by European governments are also intended to combat structural unemploy- ment. In the light of these realities, it is stated in Lisbon Strategy of March 2000 “European Union intends to make Europe attractive for investment and employ- ment and to set targets focusing on knowledge and innovation for growth” (Turkey Ministry of Industry and Trade 2011, p. 13). Its main goal has been “growth and jobs” that are of high quality. Vocational Education and Training (VET), by providing the continuous development of the sufficient skills of the labor force aims to meet the need for competitiveness of firms. Following up, the Barcelona European Council of March 2002 called for the creation of processes specific to VET (Bannerman 2002). Copenhagen Declaration of the European Ministers of Vocational Education and Training (2002) which convened in Copenhagen and launched in 2002, aims to develop awareness through enhanced cooperation at a European level: performance of VET and lifelong learning in Europe foreseen in the Lisbon strategy seeks to encourage the use of various vocational training opportunities within the lifelong-learning programme (LLL) (Europa Summaries of EU legislation 2000). For Europe, participating countries and stakeholders have met at the same setting and agreed on strategies to address these challenges. Maastricht Council, launched in December 2004, developed European Cooperation in VET by raising the visibility and profile of VET (Communique´ of Communique´ European Ministers of Vocational Education and Training 2004). At the second follow-up meeting in Helsinki of the European Council launched in December 2006, the process was evaluated and its strategies and priorities were reviewed for

10 Public and Private Initiatives in Skills Training in Turkey 209 expansion with the aim to improve investment in human capital and for further adaptation of training systems in response to challenges (Communique´ of the European Ministers of Vocational Education and Training 2006). The next meeting held in Bordeaux launched in November 2008, reviewed the priorities and strate- gies and promoted the future education and training programme for 2010 (Communique´ of Communique´ European Ministers of Vocational Education and Training 2008). The Bruges Council launched in December 2010 provided long- term strategic objectives for European cooperation in VET for the period 2011–2013 (Communique´ of Communique´ European Ministers of Vocational Education and Training 2010). The policy framework used by the EU in the accession process of Turkey is important in preparing industrial policies within the framework of the strengths and weaknesses of the Turkish industry. Based on the Turkish industrial strategy document, 2011–2014 was published by the Turkey Ministry of Industry and Trade on 04 June 2011 as a basis for the “strengthening of VET on the European and national levels, through voluntary cooperation, for the achievement of a competitive economy and a genuine labor market of Europe with the recognition of professional qualification and European Employment Strategy.” This study revealed that Turkey must adapt to increasing global competition, improve its own competitiveness and maintain high-growth areas by implementing active labor policies (Turkey Ministry of Industry and Trade 2011). Expectations of the workers’ section should be discussed within the scope of policies to be implemented holistically and supported by government agencies. The priorities 9th National Development Plan (NDP) covering the 2007–2013 period and relevant to the Human Resources Development Operational Programme (HRD-OP) involve supporting the aims of “increasing employment” (Ministry of Labor and Social Security 2010). This includes improving the employability of the target groups and strengthening the capacity of public employment services. These goals as well as the amelioration of the work environment have a linkage to “decent work” in a broad sense. Toka (2005, p. 10) cites the several training programmes offered by unions to their members. An important venture in this area is the joint project by the Metal Employers’ Association of Turkey (MESS) and Metal Workers’ Union of Turkey (Tu¨rk Metal) whose main objective is to provide a mechanism for continually improv- ing the productivity and competitiveness of the metal industry as well as to provide ongoing skills development for employees. The main objectives of this cooperation are to provide skills development and training for workers and to contribute to the ongoing competitiveness of the industry. As a matter of fact, the lessons learned from this cooperation served as a basis for creating the norms of the newly established Vocational Qualifications Authority of Turkey. In this chapter, the MESS—Tu¨rk Metal joint training project and its contribution to the development of vocational qualification standards within a national qualification framework are evaluated from the perspective of the Turkish Active Labor Market Development Programme.

210 Y.P. Soykut-Sarıca 10.2 Responding to Challenges: Bridging the Gap Between Training and Employment New information and communication technologies have paved the way for an environment that is more global and based on more intense competition, thus spreading the form of work that depends mainly on information. Information society tended towards organizational changes for the improvement of human capital. Chamberlain et al. (1980, p. 609) argued “policies and programs to educate, train and upgrade the workforce; offering, counseling and employment services to workers and potential workers can diminish structural unemployment”. Hight (2012) was arguing that “ there can be structural unemployment, it is most often a small segment of the labor force, . . .if they need to, they will adapt to the labor that is available and will offer training to bring those labor skills up to what is needed”. Structural unemployment occurs when the structure of industry changes and eliminates some jobs, while creating other jobs for which qualified workers may not be readily available. Bic¸erli (2013) defined structural unemployment . . .“this may be because people’s tastes have changed or it may be because technology has moved on and the product or service is no longer in demand”. Economist Solow (1973) also offered, “. . .there was a serious mismatch of the kinds and qualities of labor needed by industry and commerce and the kinds of labor offered by the unemployed”. For the sake of comparison, what is the level of structural unemployment in Turkey? Gu¨rsel (2013) was arguing that there were structural features of unemployment and that workers lacked the skills needed by employers, meaning “exclusively a problem of insufficient labor demand”. Today, in Turkey, Gu¨rsel (2013) declared that “the robustness of economic growth as well as its capacity to create jobs has been the main subjects in debates on joblessness” . . . “although job creation took place particularly in the service sector, as a result of rising employment but a slower pace of added value”. Today, companies must sustain themselves through a highly skilled or sufficient workforce in order to compete on a global scale. According to Turkey’s Labor Market Report published by Turkey in 2006, Strengthening Vocational Education and Training System, “labor market dynamics depends on the needs of industry and commerce, ‘the demand side’ and the availability of trained individuals ‘the supply side’ to meet current demands and to adapt to future demands” (Labor Market Team Strengthening the Vocational Education and Training System in Turkey 2006a). The EU’s agency working to strengthen European Cooperation in VET projections of skills needs for the next decade, project that technological change will increase the demand for those with high and medium qualifications at the expense of low-qualified people. People with low qualifications will be hard pressed in finding a job in the future (European Center for the Development of Vocational Training 2008). Rodrik (2006) denoted that developing countries such as India and China where steps were taken in the area of education, supported R&D investments and the overhaul of industries. It no longer seems possible for a country to rely on cheap the labor advantage to get ahead in competition, where need a market system was

10 Public and Private Initiatives in Skills Training in Turkey 211 Table 10.1 Population, potential labor force Population Potential labor In % of Labor force In % of force in millions population in millions population 2004 68.9 47.8 70.7 24.3 48.7 2008 71.5 50.8 71 23.8 46.9 2011 74.7 53.6 71.8 26.7 49.9 Source: Household Labor Force Surveys, Turkish Statistical Institute functioning properly. See Table 10.1, the population was almost 74.7 million in the year 2011 and 75 million in the year 2012 in Turkey. Today, a greater innovative production structure is the determinant of competitiveness and must be expanded in developing countries, including Turkey. In addition, the share of low value-added sectors, such as agriculture, dropped with the switch to information producing commodities and services with high value-added sectors. Education and training is a central role in responding to the challenges. U¨ nsal (2009, p. 80) proposed that “the sensitivity of the educational sector towards labor demand will rise, human capital in areas in demand by businesses will be strengthened, and flexibility in the labor market will be increased through education.” Consequently, not only blue- collar workers in the manufacturing industry, but also employees at middle man- agement level lost their jobs due to the emergence of new production organizations. Table 10.1 presents the basic characteristics of labor force for the last available years in Turkey; figures are provided by the Household Labor Force Surveys of the Turkish Statistical Institute on population, showing potential and actual labor force. The growing educational participation of the youngest age group is the most remarkable factor. As the potential labor force is increasing more rapidly, the labor force partici- pation rate (LFPR) declined between 2004 and 2008, but has increased again in 2011. Taking into consideration the fact that approximately 800,000 new people are added to the workforce every year in Turkey, the true nature of the problem can be better understood. According to 2012 data from the Turkish Statistical Institute, there are 2 million and 539 thousand unemployed people; and the industry is experiencing problems in finding qualified workers. In fact, even if jobs go unfilled, these people cannot fill them because they have insufficient or unwanted skills. As a result, businessmen think that the unemployment problem in Turkey has now been replaced by the problem finding the required qualified workforce. Thus, in Turkey, there are also the qualified workers’ problem combined with the unemployment problem. People who have a profession do not face problems finding jobs, but the ones who don’t have any skills or a profession have a hard time in finding job. The president of the Association of Small and Medium-Sized Enterprises (KOBI˙DER) Haber Monitor (2013) interpreted the Turkish Statistical Institute’s statement on decrease in unemployment. As the president stated, “despite the decrease in the general unemployment rate, it is a more significant concern that the young unem- ployment rate is greater than the general unemployment rate”, adding that “according to Turkish Statistical Institute data, the number of unemployed people has decreased 547 thousand and announced to be 3 million 71 thousand. As a result,

212 Y.P. Soykut-Sarıca the unemployment rate was determined to be at a 12 percent level with a decrease of 2.9 points. However, the fact that the young unemployment rate is as high as 21.2 percent shows that one out of every four young people is unemployed. The main reason for this is lack of qualified workers”. The concept of structural employment has, nevertheless, gained wide acceptances, especially with the growing influx into the labor force of young workers, who are not well-prepared for employment. In Turkey, policies that should be followed to deal with employment and unemploy- ment problems have to be large-scaled and comprehensive. One of most significant problems in Turkey that has been discussed for years is unemployment; however, the other is the lack of occupational qualifications (Roberts et al 2007). The Interna- tional Relations Specialist of Turkish Employers’ Association of Metal Industries (MESS) ˙Ic¸li (2011, p. 159) declared that lack of qualified workers have been increasing and expanding the unemployment problem. Thus, the lack of occupa- tional qualifications and the lack of the qualified work force are among the basic factors that negatively affect the country’s competitive power (I˙c¸li 2011, p. 159). Dogruel and Ozerkek (2011) argue the changes in sectoral composition are expected to affect the employment level and they have analyzed a model data. Based on the arguments outlined in the study, it has been proven there was a positive correlation skill level of labor force and unemployment in Turkey over the period of 1988–2007. The share of industry in economic activity dropped 0.7 point 18.8 %, although the rise in employment since 2009 has been strong and positive in Turkey (unemployment rate 14 % in 2009 and 9.8 % in 2011). See Table 10.2 where total unemployment rates demonstrate Turkey has the high youth and female unemployment rates. Turkey has a non-qualified or unskilled labor force because the definition of skilled labor is labor force with high school and tertiary education. In Table 10.2, the attempt to investigate the relation between skill levels of the labor force and unemployment in Turkey is presented. Labor force in tertiary and secondary education rates is relatively less; on the other hand, the share of primary education exceeds half of the total labor force in Turkey. Unemployment rates by all education levels rose over the two decades. Table 10.2, also demonstrates the share of unemployed labor force with the primary education constitutes nearly more than half of the total unemployed people. There is also a decreasing trend in unemployment with primary education level during the period of 2007–2010. In addition, unemployment with secondary and tertiary education is low relative to the primary education figures in Turkey. The structural unemployment rate in Turkey is still high, so the effects of medium and long-term strategies on employment are important. Gu¨rsel (2013) had pointed out in his column in the newspaper about the level of structural unemployment presented in the survey in Turkey which was recently completed by the Turkish Employment Organization (Is-Kur). “Is-Kur surveyed a thorough sample of firms that employ at least 10 workers in the months of September and October 2012. According to the survey, firms employed 6.240 million employees and maintained 270,000 job vacancies, with a weighted national average of job vacancies of 3.3 percent”. Lastly, Gu¨rsel (2013) notes that: “the Turkish labor market suffers from a serious

Table 10.2 Labor force and unemployment indicators 10 Public and Private Initiatives in Skills Training in Turkey Unemployment Labor force by education level Unemployment by education Total Youth Female (% of total labor force) level (% of total unemployment) Total unemployment (2010) (% of total labor force (% of female labor Primary Secondary Tertiary Primary Secondary Tertiary (2010) (2010) (2010) (2010) (2010) (% of total labor force) ages 15–24) (2010) force) (2010) (2010) 20.4 15.9 52.5 26 13.9 Turkey 11.9 21.7 13 63 2007– 2010 The data covers a period 2007–2010 inclusive. Source: WDI and GDF 2012 213

214 Y.P. Soykut-Sarıca problem of a mismatch between labor supply and demand”. Thus, unemployment is still high, but companies have trouble finding skilled-workers. See Table 10.3, where the declining trend is revealed in LFPR and a rise of more than 5 % from 2004 to 2011 at all levels of education. The table demonstrates the composition of labor force by education level in four groups: illiterate labor force share in total, labor force with high school, with vocational high school and tertiary education. Only graduates of vocational high school seem to participate relatively more in the labor force. It is also clear that unemployment has been only slightly less at vocational high school education level but has still been high at university and higher education levels in Turkey. Therefore, structural and professional change processes have caused job losses at serious levels. The International Insti- tute for Management Development World Competitiveness Yearbook 2011 data affirms that the current education system of Turkey does not meet the requirements of a competitive economy. According to this criterion, Turkey ranks as the 39th country among the 59 countries evaluated in this research (World Competitiveness Yearbook 2011). For the struggle against unemployment and the lack of occupa- tional qualifications, local factors should be taken into consideration at the level of industries. It is significant to achieve a sustainable success, but Balog˘lu (1992) emphasizes that “vocational and technical training in Turkey functions mostly with industrial technical domain orientation. Nevertheless, in most developed countries, almost all occupations in the business world are acquired via the school system. In Turkey, on the other hand, many occupations in the market are not considered yet as professions to be a subject of education. They are mostly transferred from father to son as an occupation particular to the family or they are considered as ordinary professions that everybody can carry out without depending on any qualification or characteristic”. Akpınar (2004) proposed an answer to the problem that “Turkish vocational and technical education system should be diversified so as to include the professions in these service areas, and the education on this subject should be based upon these enterprises”. As for vocational education, training colleges and vocational high school edu- cation hold a key position; when determining the problems, it is observed that maintaining the present vocational training programs and materials are not consis- tent with the needs of the enterprises. Educational materials and training technol- ogies are not up to date. Despite the fact that workforce with vocational training is the most required kind of workforce in the labor market, it is a remarkable and significant fact that the employment rate of vocational high school graduates is only 58.3 %; 36.4 % are transferring from vocational college to university, 4 % are attending military service. In Turkey, where more than half of the workforce have graduated from primary school as demonstrated in Table 10.4, there is a significant inconsistency between the labor demand and labor supply in terms of quality and quantity. As a result, there is a qualified staff deficit in enterprises but there are also unemployment problems or changes in line of business for graduates. Especially the skill and knowledge level of vocational high school students is not at the desired level when taken into consideration in accordance with the vibrant and constantly changing

Table 10.3 Labor force participation rate by educational level 10 Public and Private Initiatives in Skills Training in Turkey Labor force (in millions) Employed Unemployed % of labor force % of unemployment % of employment 2004 2011 2004 2011 2004 2011 2004 2011 2004 2011 2004 2011 All educational levels 22,016 26,725 19,632 24,110 2,385 2,165 46.3 49.9 10.8 9.8 41.3 45 34.1 4.3 4.6 20.6 19.6 Illiterate 1,306 1,203 1,250 1,147 57 56 21.6 52.1 14.7 12.6 42.4 45.5 65.5 16 11 54.8 58.3 General high school 2,792 2,783 2,382 2,432 410 351 49.7 79.3 12.2 10.4 69.2 71 Vocational high school 1,804 2,582 1,515 2,297 288 285 65.2 University and higher education 2,524 4,476 2,215 4,009 308 467 78.9 Source: Household Labor Force Surveys Turkish Statistical Institute 215

216 Y.P. Soykut-Sarıca Table 10.4 2010–2011 education indicators Number of Number of Number of Level of education schools/units teachers students Primary education 32,797 503,328 10,981,100 General secondary education 4,102 118,378 2,676,123 Vocational and technical secondary education 5,179 104,327 2,072,487 VET colleges (2009/2010) 1,617 105,427 3,322,559 Non‐formal education (apprenticeship + in-house) 1,853 12,249 4,127,139 Source: National Education Statistics, Formal Education 2010–2011 Ministry of National Educa- tion of Turkey needs of professional life. Within this framework, one of the basic problems encountered in vocational and technical training is the absence of a connection between theoretical knowledge and application. Reasons for this absence are as follows: there is no functional connection between education and employment; there is no serious consideration for the requirement of technical and vocational training; the methods used in curriculum formation are outdated and not connected with professional life; vocational training is not formed parallel to the needs of the labor market; there is a lack of sufficient vocational training for people so as to encourage them in order to continue a higher level of education. The data on vocational training and its relationship with employment as indicated in Table 10.4 for “2010–2011 Education Indicators” does not have the potential to meet the current and future needs of the dynamics of the economy. Stakeholders’ state that no effective and sustainable results have been obtained despite all the efforts and projects carried out in this respect. The fields of education which require the most change and renovation is vocational and technical education. The solution is to reshape the vocational and technical education in levels in order to adapt it to the labor market, through school-enterprise cooperation (Balog˘lu 1992). This subject is one of the main agendas of the stakeholders and the Turkish govern- ment. This national and international research also supports this finding. This is because educational reform and a special program outside the school are probably adequate due to current insufficient education. The relationship between vocational and technical education institutions and enterprises should be established in an efficient way; and educational activities should be carried out in accordance with the sector’s expectations in terms of program context, application and being employ- ment oriented (Gu¨rsel 2004). However, when the problem is bigger, changing the content and structure of the curriculum provide more positive results in comparison to the after-school solution programs. The best example of school-enterprise connection can be found in the Dual System in Germany, which is the traditional dual system of German employment relations (Ferner and Hyman 1998). In this model, the school- based general education, work-based private education and vocational training is separate from each other. This system in which the curriculum is determined collec- tively by labor and management institutions is successful especially in facilitating

10 Public and Private Initiatives in Skills Training in Turkey 217 young people’s transition from school to work life. However, the key to success is not only in sharing the responsibility of education between the two parties, but also in the general education that provides vocational development in the areas required by professional life. The short-term maximization of stakeholder interests by a more neo-liberal approach is gradually replaced by the emphasis on the long-term interests of multiple stakeholders. From this point of view the formation of a National Employment Strategy based on social dialogue has a key significance. In this context, national economic pro- grams should be taken into consideration together with employment policies. In legal regulations and promotions, the increase in registered employment should be prioritized. Also, the employment policies should support the development of effective and qualified work in enterprises, taken into consideration in a way which increases the competitiveness but also the employment rate of the popula- tion. Especially in the area of vocational training and employment, regulations, promoting the social dialog and working in collaborative culture should be empha- sized. Here, the most important issue is to organize the education system according to the changing needs of the labor market. In order to reinforce the relationship between the business world and schools, it is necessary to promote collaboration so as to increase the efficiency of theoretical and applied subject matters and to bring the vocational training system into conformity with these objectives. In 2012–2014 Medium Term Programs—3 year-period of Turkey (2011) “increasing the sensi- bility of education towards the labor demand by training the work force which have the quality and quantity demanded by the labor market” are presented as basic purposes. In order to decrease the unemployment rate to reasonable rates, the necessity to eradicate the inconsistency “in terms of quality and quantity” between supply and demand is really significant. To educate qualified manpower which can realize social development is mainly the duty of the education system. The neces- sary changes about regulations are provided by the time young people step into professional life and plans regarding which professions they will prefer are made before high school education has commenced. 10.3 Implementation of Active Labor Programs for Fostering Employment The EU Commission published a declaration on 27 January 2011, entitling new trends of cooperation in vocational training and intended to support the EU 2020 Strategy to provide conformity between the efficiency of the labor market (Cedefop 2011, p. 15). The declaration holds the quality of a strategic framework for social cooperation in vocational training until 2020 in Europe. The four priorities of the strategic framework are lifelong learning and activity; quality and efficiency; fair and active citizenship; innovativeness and entrepreneurship (I˙c¸li 2011, p. 157). It is underlined that in order to develop basic competencies, the partnerships between

218 Y.P. Soykut-Sarıca vocational training providers, local people, non-governmental organizations, par- ents and students must be strengthened. In the 8th Five-Year Development Plan covering the period 2001–2005, it was stated that the “National Education System in Turkey will be re-structured in accordance with lifelong learning”. However, criticism was raised by Toka (2005, p. 97) that initial education needs to be strengthened in order to attain the EU level; the content of vocational training courses hardly meets the needs of work life. The Ministry of National Education (2011, p. 2) has presented a strategic framework for European cooperation for education and training, envisaging “Tur- key as a country improving towards information society, growing in stability, sharing more equitably, being globally competitive and having fully completed its coherence with the European Union”. The priorities of the Plan relevant to Human Resources Development Operational Programme (HRD-OP) involve supporting the aims of increasing employment which include “improving the employability of the target groups and strengthening the capacity of public employ- ment services” (Human Resources Development Operating Structure 2010). In the “Ninth National Development Plan,” the vision, strategic priorities and policies of Turkey covering the 2007–2013 period were presented by the State Planning Organization. The Development Plan 2007–2013 made propositions about “increasing the sensitivity of education in labor demand in terms of providing vocational and technical education in the light of labor market needs and for developing the relationship between education and employment policies” (Ninth Development Plan 2006). Transformation to a modular and flexible system in vocational and technical education will be realized, taking the lifelong education strategy into consideration for training the workforce. These goals as well as the amelioration of the work environment, are closely connected with the term “decent work” in a broad sense. The lifelong learning and Adaptability Memorandum of EU published in 2003 serves the aims of employability through the development of skills and qualifications required for an efficient labor market which aim at devel- oping the Vocational Education Training system. A project proposed in the EU-supported Active Labor Market Programmes (ALMP) which is a sectoral strategy document on human resources that is working on identifying the develop- ment operating structure. European Commission Employment Social Affairs and Inclusion (2013) reviewed mutual learning which has helped universities and local administrations to deliver vocational training, retraining and entrepreneurship courses for target groups along these lines, for important joint projects coming together. These projects are carried out and implemented in sectoral, local and national levels and have tried to gain notable results. In Turkey, Active Labor Market Programmes on human resources is under the responsibility of Is-Kur1 1 Is-Kur, an authority that is a related agency of the Directorate of Social Security Authority, an affiliate of Ministry of Labor and Social Security, is an autonomous public agency having corporate body in terms of administration and finance and is subject to the provisions of private law.

10 Public and Private Initiatives in Skills Training in Turkey 219 (Turkish Employment Organisation). The project by Is-Kur was launched in October 2003. Is-Kur offers various training activities the duration of which vary between 12 and 48 months and gives vocational qualification certificates. These are Is-Kur graduate training for the unemployed, women, young workers, disabled people and ex-convicts. Vocational Education Training (VET) is also taking place at higher educational levels thereby linking VET with general education; in particular, with higher education. Toka (2005) denoted the non-formal educational activity taking place outside the formal system; here, training activities are mostly carried out under the Ministry of National Education (MoNE). MoNE manages these activities both within its structure, and in co-operation with other institutions. This system is mainly governed under Vocational Courses and offered under the Education Law no. 3308 (EC Employment Social Affairs and Inclusion 2013). For the strengthen- ing of cooperation in VET, the cooperation between MoNE and industrial institu- tions are implemented through projects aimed to provide education and training in the new fields of occupations. For the first time in Turkey, providing the vocational guidance program has been carried out by the Ministry of Education and Is-Kur and another organization called National Career Information System. Training pro- grams provide guidance to all individuals at the age of 13 and above during their learning and development (Ministry of National Education Directorate General for Foreign Relations 2011). 10.4 System Approach of Developing National Qualification Framework Despite the fact that lack of middle-level labor force in companies continues, graduates of professional training institutions do not have the qualities required by companies, and the qualification assessment of workers is sometimes far below the requirements of the workplace in practical work knowledge, analytical skills, quality of production and especially health and safety knowledge. They should have a short in-service or in-house training for pre-service training in order to get these required qualifications. Qualified medium-level labor force should be provided in the direc- tion of the expectations of the sector (Gu¨rsel 2004 and Aksoy 2004). Another significant issue regarding Turkey is ignoring the fact that employees should con- tinue their professional trainings on the job after they are employed. This point is particularly significant in order to keep the employability of employees at high levels without disruption and decrease the risk of unemployment by helping them adapt to improvements. Sometimes formal education versus training may not be adequate to keep up with technological changes and emerging needs for skills development gained through informal and non-formal means. Education and training through non-formal means covers for example a lecture on social rights organized by a trade union which can be used also to address skills shortages or compliance with

220 Y.P. Soykut-Sarıca regulations regarding professional qualifications. In Turkey, there has been a sig- nificant increase in education and training validation in the last few years. As the non-governmental organizations and the private sector have been taking more initiatives in vocational training, the above-mentioned system has been applied through important projects carried out under the cooperation of Ministry of Educa- tion (MoNE) and the Turkish Employment organization (Is-Kur), whereby signifi- cant results have been obtained through the application of these projects in local and national areas. National Qualification studies have been initiated with the participa- tion of participants from MoNE, the Ministry of Labor and Social Security and Is-Kur. Programmes by the public sector on education and training are carried out in Turkey mainly under the MoNE which is trying to promote the project Strengthen- ing the Vocational Education and Training System in Turkey (SVET) which is a five-year project that results from an agreement signed between the European Commission and the Government of Turkey (Labour Market Team Strengthening the Vocational Education and Training System in Turkey 2006b). Components of SVET are listed in the National Qualifications System, Quality Assurance System (NVQS) of sectoral qualifications based on occupational standards regulated by the Vocational Qualifications Authority (VQA) for 12 months, and decentralized VET governance in order contribute to the Modernization of Vocational Education and Training (MVET). The three subsystems, NVQS, the MoNE qualifications and the Higher Education Qualification Framework (HEQF) in Turkey, are linked to each other and are all in progress. The Ministry of National Education is planning to pilot national qualifications and, where relevant, linking them to national occupational standards by establishing Formal Education Qualification Frameworks, aiming to align them with the Qualifications Framework of the European Higher Education Area. There is also a connection with national occupational standards for VET colleges’ qualifications. This project led to ensure the participation of several stakeholders involved in developing initiatives for developing the National Quali- fications System. Strategies are emerging on strengthening the relation between education and employment by supporting lifelong learning programs. They can improve the education systems and policies by assisting the formal, non-formal and informal learning outcomes according to the requirements of the business world. Among the sustained studies like national vocational teacher training standards, program development and disseminating the project into regions, a labor market and skill analysis needs to be conducted, professional and educational standards, need to be established, and education-programs teacher competencies and certification also need to be ensured. Qualified medium-level labor force is important for all sectors and for the primary metal industry. The Director of Education of Employers’ Association of Metal Industries (MESS) Engin (2011) interpreted that the results may be an input for the upgrading of educational staff, investing in equipment, fine tuning of educational programmes and curricula so as to meet the local needs, directing internship and apprenticeship programmes by adapting the capacities of vocational-educational branches to local circumstances. The vocational qualifications prepared by stakeholders will be used to facilitate the adaptation of European Qualifications Framework (EQF) which “aims to link

10 Public and Private Initiatives in Skills Training in Turkey 221 different countries’ national qualifications systems to a common European refer- ence framework as a tool to promote lifelong learning which is obtained from formal and non-formal education with an informal learning appeal to all levels of learning outcomes” (European Commission Education and Training 2012). The recognition of skills and abilities of the Turkish labor force and competences in European countries pave the way to increase the importance of the Turkish National Vocational Qualifications System (NVQS) to promote lifelong learning which is linked to the EQF (Engin 2011). One of the important outputs which provide the sustainability of these studies is the formation of the Vocational Qualifications Authority (VQA) established within National Qualifications Framework Commission in 2006 in Turkey. VQA carries out the preparation of the National Occupational Standards (NOS) and vocational competencies with the help of the working groups presenting the industries and industry committees. The three subsystems are VQA, MoNE and Council of Higher Education (HE), all of which are under the development of the National Qualifica- tions Framework. For this reason, Vocational Qualifications Authority Law No. 5544 has been revised and transformed into the Turkey Qualification Associ- ation (TYK). Especially the promotion of regulations like using vocational qualifications in learning, assessment and certification, is aiming to provide a registered and com- petency certified employment increase. There are two types of vocational training. One is the vocational education provided during school wherein work by the Higher Education Committee is in progress. National Occupational Standards will be used to revise and develop curricula in VET colleges according to the needs of the industry. The other one is the vocational education provided for people who have graduated or about to graduate from school where MoNE is in progress. Actually, they are different parts of the same system. Another main quality of vocational training is to create a direct link between the school and the enterprise in order to discover the necessary areas. To operate an industrial competency system which will cover the informal learning will provide an effective contribution to the resolution of unemployment and lack of occupational qualifications problem stated above. Due to the fact that formal education curriculum used in the education for qualified labor for industry is long, slow and based on outdated technologies, it does not have a flexible structure that is compatible with new developments. The National Qualifications Framework, which is in the process of being formed in Turkey is based on learning outputs. The responsibility of the Turkey Qualifica- tion Association is to determine the National Qualifications Framework essentials for the labor market and society as well as to determine the National Qualifications related to professional areas, to strengthen the access to competencies and then to expand employment, training and consultancy services. Emerging needs for learn- ing output gained through formal, informal and common learning. When these programs are evaluated according to education competencies, they provide the chance to plan and apply programs based on learning outputs. These are as follows: to measure the learning and to evaluate those together with the stakeholders’ views in accordance with the quality guarantee cycle, then to unify the European Credit

222 Y.P. Soykut-Sarıca Transfer System (ECTS) and European Credit System for Vocational Education and Training (ECVET) credits. In the creation and operation of the substructure of the system, institutions presenting the labor and management may provide key roles and duties by accessing the labor force according to demands. Initiation of the National Qualifications Framework of Turkey attempt to raise the National Occupational Standards (NOS) number of 600; this way, generalized testing and certification activities within the framework of the National Qualifica- tions access to competencies for qualified labor force are developed based on these standards. In Turkey, approximately 750 standards of the profession have been identified to be prepared and in accordance with the detection of a cooperation protocol, which was signed with 56 different institutions or organizations representing the business community for the preparation of 729 professional stan- dards. Six hundred and nineteen draft occupational standards were prepared and 360 of them were published in the Official Gazette by the end of 2012. Following the preparation of the NOS, 153 National Qualifications have been put into effect. National Occupational Standards are required to be completed and implemented by the end of 2014 in Turkey (Akbas¸ 2013). Vocational Qualifications Authority, Ministry of Education and Turkish Employment Organization will play key roles in creating more cooperation and partnership between the social partners during this process. It is important to determine immediately the associations and institutions which will accredit the training providers on an industrial level and to start the operations accordingly. It is also necessary to accredit the institutions which can provide the accredited training, based on industrial level competences according to nationally and internationally accepted standards. The Metal Employers’ Association of Turkey (MESS) has been one of the organizations authorized by the VQA to prepare national occupational standards and national qualifications in automotive and metal sectors; MESS was also represented on boards of VQA as Metal and Automotive Sector Committees. Without any prejudice, MESS was involved in the National Vocational Qualifica- tions Framework, a development which has been carried out so far with all the vital activities, giving support to inter-sectoral dialogue for exchange experience. MESS played a strong role in the formulation of relevant and coherent occupational standards and qualifications within the framework of maintaining co-operation with academic support, field studies, interviews with engineers and workers, and submission to stakeholder opinions to date. Since the last quarter of 2012, MESS has prepared 63 National Occupational Standards for the metal and automotive industry (Akbas¸ 2013) in order to assure new graduates are equipped with sufficient skills, knowledge and competences from VET schools and colleges and to provide workers with qualification certificates (Engin 2011). Promotion and authorization of structures have been formed in partnership of the social parties, the operation of a system which is in compliance with the needs and requests of related sectors. It is an important opportunity for operating with the desired system successfully in order to provide roles and duties for labor and management associations in the accredited training or certification process based on national competencies.

10 Public and Private Initiatives in Skills Training in Turkey 223 10.5 Sustainability of the Project MESS and Turk Metal Trade Union The vocational training as stated in the examples above should be provided through formal education, but can also be provided through programs outside formal education. If the conformity between the skills demanded by employers and the qualities of the job is sufficiently in place, the short-term training programs carried out within the existing labor market conditions might be useful in eliminating excessive in-house training. Healthy economic development and sustainable increase in employment go hand in hand with well-planned and programmed education systems. Competencies are based on theoretical and practical vocational training programs; education and training are based on national and international standards which are determined according to labor market needs. In summary, plans should be made at a micro and macro level and necessary actions should be taken immediately in regards to which industries will gain strategic importance; which regions and provinces will gain importance; in line with the information obtained, how many workers will be required and which competencies should be looked for in these workers; and ultimately, what kind of vocational education will be provided for the workforce. In this process, pre-determination of the roles of the stakeholders will be helpful in the assignment of the mechanisms which will provide synergy in accordance with the possibilities. But it is possible for the individual to obtain the necessary learning outputs in compliance with the current technologies in order to get employed in a shorter time. It is necessary to create and present special training programs and courses following the vocational training. In order to provide the desired efficiency, employers should be actively present in the design and application processes of the program, and training should be linked to the needs of the local labor market needs. In fact, cooperation between trade and employers unions in Turkey has led to a considerable boost for vocational training at the sectoral level, bringing benefits for workers and businesses alike in Turkey (O¨ ke 2007). One of such cooperation ventures has been the joint training project of the Tu¨rk Metal Union (Metal Workers’ Union of Turkey) and MESS (Metal Employer’s Union of Turkey). Thus, through this joint effort, numerous benefits are expected for metal workers in Turkey. Tu¨rk Metal is the largest union in the sector, representing about 45 % of workers, in the industry with a membership of 282,000. MESS represents about 300 employers, which represent about 65 % of metal work and electronics (Strengthening the Vocational Education and Training System 2006b). Most of its members are large-scale enterprises, including manufacturers of cars, household appliances, electronics and other metal products. The origin of the study about the joint training agreement between MESS and Tu¨rk Metal Union Training Project is based on Dereli’s study (2011) about employer–labor partnership by worker’s training. It provides possibilities for labor and employer organizations to organize and administer their activities, including training activities, freely, in recognition of the benefits that these provide

224 Y.P. Soykut-Sarıca for their members. These two unions have been cited as a model by the International Labor Organization (ILO), the institution which is universally considered as the source and the inspector of essential labor rights and freedoms. The Freedom of Association and Development Report published by ILO on 25 July 2011 builds on the same idea by seeking the role of the freedom of organization in the development of such a joint training program, demonstrating that management and labor may work in collaboration. This training role is also consistent with the principles of the freedom association, in particular the ILO Convention 87/3. With their large membership base, MESS and Tu¨rk Metal, which are both very strong organizations, have financially launched this training program which will continue until all Tu¨rk Metal members are covered. Dereli (2011), clearly highlighted that, beginning in 2000, the project represented the largest and most significant venture of its kind, taking into account the number of participants, the size of employers and the duration of the program. The parties will split the costs of the training programme equally between them. Tu¨rk Metal Union and MESS are working in collaboration on projects which consider the enhancement of the use of different ways of learning and the development of the tools which serve the purpose of matching the job and skills. MESS and Tu¨rk Metal Union contributed to the education system with the efforts and projects they have realized until now. But with the incorporation processes, the context of their work has changed. This system will have to prove its sustainability in the coming years, but it represents an important step in the process of bridging the gap between training and the labor market. The financial strength and size of the social partners emanating from the freedom of association seem to have made such a big venture possible. The trust which is based on a long-standing partnership, and collective bargaining between the social partners here also seem to further other training activities between them. In order to meet the requirements that can arise in the issues mentioned above and to provide a good application model for Turkey, the establishment processes of the Vocational Training Center Company entitled MEMAS and the Vocational Qualification Testing and Certification Center Company entitled SIBEM have been completed, “designed with a view to offer courses leading to the awarding of official occupational certificates” in the metal industry as a result of joint project work between MESS and Turk Metal that lasted more than a year. SIBEM will pick up where the project left off with assessment, testing and certification; preparing new National Occupational Standards; revising current National Occupational Standards; and preparing and revising the National Qualifications (Engin 2011). MEMAS provide training programs for workers according to the National Occu- pational Standard (Metal Employer’s Union of Turkey.org 2013). This is consistent with the norms of the newly established VQA of Turkey. These cooperation pro- jects which have been designed between Tu¨rk Metal Union and MESS jointly in half shares are ready to develop, manufacture and apply appropriate projects for the enterprises. First, there will be a project on vocational training programs which will aim to offer vocational training to Turk Metal members in MESS affiliated estab- lishments, and at the end of which the participants will receive “official vocational certificates” accepted in Turkey and the European Union; and second, MESS will

10 Public and Private Initiatives in Skills Training in Turkey 225 provide trainers and tools to start a practical, on-the-job training program in MESS members’ work places. This training is to be carried out in workplaces, with MESS being responsible with providing technical instructors and necessary equipment. The main target audience of the company are the laborers who are members of the Tu¨rk Metal Union, people that will be employed by MESS members and that will be accepted to the adjustment program; or those who will apply to enter the exam to obtain a vocational competence certificate in the industry and services sectors; who would like to work in various sectors and wants to improve their knowledge and skills; who need a vocational certificate in order to work in dangerous works; also, unprofessional-unemployed people who would like to have a profession. As of January of 2013, testing and certification in completed infrastructure regarding 61 qualifications has been established, and certification activities for successful people who have received Vocational Qualification Certificate have started (Metal Employer’s Union of Turkey.org 2013). Akbas¸ (2013) stated that certificates issued by vocational qualification testing and certification centers like SIBEM will enable individuals to prove they have required skills, abilities and competences to do the job. The National Vocational Qualification Standards sup- port the establishment of VOC-TEST Centres (occupational standards develop- ment, occupational information and skills examination and certification centres) in line with the objective of the establishment of a National Qualifications System, which is sustainable and based on accepted occupational standards. It aims at the implementation of the evaluation, measurement-certification system with interna- tional validity for the labor force and the establishment of the concept of lifelong learning practices (Vocational Qualifications Authority of Turkey UYEP 2011). Successful adaptation of this system can be seen in the application of “Automo- tive VOC-Test Center Project” for the automotive sector, prepared and directed by MESS. The project covers 15 National Qualifications prepared by MESS for the automotive sector. Testing and certification procedures will be carried out in motor vehicle manufacturing companies in the industrialized cities of Turkey. The dura- tion of the project is 24 months (Metal Employer’s Union of Turkey.org 2013). Knowledge and skills of the individual tests and evaluations are based on the criteria described in the national qualifications. The certification process is directed under the authorization of the training accreditation body by the Vocational Qual- ifications Authority. The Vocational Training Center Corporation’s purpose of establishment is to adapt the work force employed in enterprises to the current manufacturing tech- niques and to meet enterprises’ increased need of qualified staff. Within the framework of lifelong learning, the person can obtain the learning outputs that he/she should have in order to perform his/her profession according to the nation- ally and internationally determined competence criteria. In the areas where industry is intensive and for the selected professions according to the demand and need, it is considered that the vocational training centers and related workshops will provide an effective contribution to the problems that are experienced in Turkey. When accomplished, this work will be a model for other stakeholders. Also, in

226 Y.P. Soykut-Sarıca cooperation with various public and private institutions in terms of training locally, a qualified and well-planned vocational training opportunity can be provided and organized. For the work force to become employed people have to receive training which is particular to the business; they have to update their knowledge and skills during lifelong learning processes. The learning process is not only realized in class. Together with information technologies, self-education has become possible from almost every source. It is also possible to learn from a colleague at work or from an expert. The individual should document his/her learning acquisitions through an examination which is to be organized in a standard and accredited way. In the road leading to learning acquisitions, it is essential to determine the standards in an objective way. As a result, both unions have taken an important step which will be a model in Turkey and in Europe for the resolution of the unemployment problem by providing a model management–labor partnership. 10.6 Conclusion Today training and employment policies are interrelated. Because labor markets have had to become more flexible and innovation has become more important, companies have to deal with challenges for human capital development. Employ- ment policies and programs can accomplish their goals only when they are inte- grated with training policies. One of the basic problems in Turkey is the disconnection between training and employment. There should indeed be a func- tional connection between training and employment. Otherwise, the work force that is trained but not qualified for work life will increase constantly which is the case for Turkey at the moment. The service industry, which is the fastest growing sector in developed countries, requires highly specialized, multi-skilled employees with creativity. Also, new technologies in the service industry have widened the differ- ence between prices (Biagi and Tiraboschi 2000). Even though there are some work branches that have been left aside due to innovations emerging from technological developments, there are some new work branches emerging out of the requirements of technological developments. For this reason, training of work force on a single field is not satisfying anymore. Instead, lifelong training of a work force that has qualities which are required in order to adapt to present requirements is preferred. The basis of sustainable economic growth is the macro economic criteria together with the determination, realization and application of long-term employment strat- egies and policies. In Turkey, there is a need to develop a modern, flexible and highly qualified vocational education system which meets the socio-economic requirements for a qualified work force required by the industry through the lifelong learning philosophy, as increasing the level of knowledge and competency directly affect competitiveness. In other words, a person’s continuation of employment is possible only with a lifelong training process.

10 Public and Private Initiatives in Skills Training in Turkey 227 The need for qualified and certified laborers is manifested for a sustainable development. A qualified laborer means one who has the vocational knowledge, skills and capability, is competitive on a theoretical and practical level, follows the technological developments related to his work, one who has good social skills, open to learning and applying these and creates an added value for his enterprise. The quality and the efficiency of the educational system are to be assessed by the place and position of the people who are trained via this educational system. Here, the establishment of an effective dialogue and cooperation between school and the enterprise are presented as inevitable priorities. There is a need to form education programs which must include the establishment of the “lifelong learning” concept and to develop the young and dynamic labor’s quality in a way which will meet the change and dynamism of professional life. Programs which will provide university students the opportunity to gain experience by working for the industry as trainees. Companies (such as SMEs) which do not have the resources to employ full-time staff should support them on a project-basis. Course programs should be formed by the participation of representatives from professional life. Technical skills courses should be prompted and programs providing certification should be formed other than those of universities and vocational schools, in order to improve labor. Global experiences show that training programs developed by taking into consideration the needs of the private sector are successful. In this scope, in the training of qualified labor which the economy requires, the vocational and technical training which trains in the business environment through manufacturing has to be popularized; and school management models which provide a practical relationship with pro- fessional life on a local level have to be designed and applied. The development of active labor program implementations has been put into action. In Turkey, the recent improvements in vocational training present positive outputs, but there are many steps which have to be taken in the process ahead. In order to provide young people with appropriate jobs, and adults with the opportu- nity to improve their skills in a lifelong process, the vocational training has to be popularized. There is a need to support people in obtaining vocational training, to increase the quality of the training, and to facilitate the mobility between different jobs and labor markets. In order to achieve these goals, it is significant to transform the image of vocational training and to connect it with the realities of today. References Akbas¸ B (2013) Ulusal Yeterlilik Sistemindeki Son Gelis¸meler. Metal Industry Employers’ Association (MESS). Mercek Period 18(69) (January) Akpınar B (2004) Current situation of school-enterprise dialogue in Turkish Vocational and technical education system and new researches. In: Eg˘itim kurumu is¸letme diyalogu konferansı. MEGEP/SVET, Ankara, 4–5 Mayıs 2004 Aksoy M (2004) Forming “living sector approach” in the process of dialog between educational institutions and enterprises. In: Eg˘itim kurumu is¸letme diyalogu konferansı. MEGEP/SVET, Ankara, 4–5 Mayıs 2004

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Chapter 11 The Importance of Temporary Work Agencies in Turkish Labor Market and a Comparative Study with Spain, Italy and Germany Aslı Beyhan Acar and Gu¨ven Ordun Abstract Temporary Agency Work (TAW) represents a contractual arrangement based on a triangular relationship; as such it provides many benefits for the employment system. The number of TAW has been substantially increasing EU wide since 1990s. With the directive 2008/104/EC, which has been accepted in 2008, the rights of TAW employees are being equalized with other employees. TAW is not legally established in Turkey but is trying to be legalized. Academi- cally this subject has been frequently analyzed within the fields of industrial relations, human resources management and business law. The intention of the first section is to describe the mechanism of TAW and its importance for the employment system. In the second section the progress of TAW within EU is analyzed. The last section involves a comparative study of total, female, and young unemployment rates among Germany, Italy, Spain and Turkey between the years 1998 and 2009. Also in the last section, the impact of TAW on the develop- ment of employment ratios in Germany, Spain and Italy has also been statistically analyzed with panel analysis in the last section. The TAW applications, regulations and the analysis of the impact on the unemployment status in these countries may help us to make a prediction about Turkey if TAW’s are legalized. A. Beyhan Acar (*) 231 Istanbul University, Institute of Business Administration, Istanbul, Turkey e-mail: [email protected] G. Ordun Faculty of Business Administration, Istanbul University, Istanbul, Turkey e-mail: [email protected] T. Dereli et al. (eds.), Labor and Employment Relations in a Globalized World, Contributions to Economics, DOI 10.1007/978-3-319-04349-4_11, © Springer International Publishing Switzerland 2014

232 A. Beyhan Acar and G. Ordun 11.1 Introduction Since the 1990s, within EU countries temporary work has substantially increased so temporary work agencies, which provide this kind of relationship has also increased. In most of the European countries the name, “temporary work agencies” is preferred instead of “private work agencies” nowadays. In German law, temporary work employment has been defined as hiring a person in order to lend that person to another organization for temporary time and this has been evaluated as a commercial activity (Hekimler 2004). Temporary work agen- cies make two agreements, one with the person seeking work and the other with the organization, which would like to employ that worker. During the last few years, agency work has received heightened legislative attention in Europe, at EU level as well as on national level, since the early 1990s. This interest was spurred on by the relative growth of the sector as well as the hope that agency work might offer solutions to unemployment by providing enhanced flexibility. As a result, agency work is no longer considered as a form of employment to be shunned, but has also gained in acceptance. Agency work—often also termed “temporary work” or temporary agency work”—is characterized by a triangular relationship between a works agency, a user firm and an agency worker (Schiek 2004). There is no employment relationship between the temporary agency worker and the user company, although there could be legal obligations of the user company towards the temporary agency worker, especially with respect to health and safety. A labor contract may be of fixed limited or unspecified duration with no guarantee of continuation. The employment is often called “temporary work”, “temping” or “agency work”. The hiring firm pays fees to the agency, and the agency pays the wages (even if the hiring company has not yet paid the agency) (ILO 2009). A considerable volume of economic research has been devoted over the last two decades to explaining and suggesting remedies for the stubbornly high unemploy- ment rates in a number of European countries. Among the suggested policy remedies for reducing joblessness is the relaxation of systems of employment protection by allowing firms greater freedom to create temporary jobs. These reforms presumably reflect a desire to maintain protective measures for workers in permanent jobs while giving firms an incentive to create new, temporary jobs, which may ultimately become permanent (Kahn 2009). As specified above, a great deal of empirical studies has been made about the positive impact of TAW on employment. Research has been conducted at a national level or between the countries. However, the research has mostly deals with the advancement of employment in countries that TAW is in action. TAW has not been legalized in Turkey yet and studies that state the importance of these activities if TAW becomes legalized are relatively few. Besides, instead of analyzing the impact of TAW on the employment statistically, generally research has focused on the data as independent variables. It has been considered that the studies analyzing the in impact of TAW on different groups of labor force is inadequate.

11 The Importance of Temporary Work Agencies in Turkish Labor Market and a. . . 233 Depending on the gap related with the topic, in this study the statistical impact of TAW on employment in Germany, Italy and Spain has been analyzed and depending on this comparative study, it is intended to make a prediction about the impact on employment if TAW is legalized in Turkey. 11.2 The Main Reasons of the Growing Importance of TAWS in the EU There are many reasons for the increase of TAW in Europe. Within the limitations of the study and the main dynamics of the labor force the main reasons can be analyzed as follows. 11.2.1 The Increasing Demand for Temporary Work There has been a growing concern over the perceived phenomenal growth of temporary employment since 1990s (Morrıs and Vekker 2001). Various reasons for the rising demand for temporary agency workers have been proposed. These include the reluctance of firms to increase their labor force on a permanent basis during the economic cycle and idiosyncratic variation of output demand in partic- ular; reduction of labor costs to circumvent the wages bargained in sectoral collective agreements; savings in direct labor costs, including continued payment of wages for sickness; reduction in administrative costs and immediate responses to sudden changes in work requirements (Antoni and Jahn 2006). According to the 1990s’ statistics in Sweden, employment in temporary work increased substantially over most of the 1990s. By the end of the century, fixed- term contracts accounted for 16 % of total wage and salary employment, to be compared with 10 % in the early 1990s (Holmlund and Storrie 2012). Depending on Table 11.1, it is seen the share of temporary employment among the total employ- ment in 2009. Temporary employment accounts for a considerable part of the EU27 work- force—around 14, 60 % of which is involuntary. Workers on temporary contracts are one of the most vulnerable groups to economic downturns (Dra¨ger and Marx 2012). 11.2.2 To Reduce Unemployment Rates In many countries the effort to decrease the unemployment rates is considered to be the top priority for employment problems. Advancement in the employment rates or

234 A. Beyhan Acar and G. Ordun Table 11.1 The share of EU-27 13.5 Luxembourg 7.2 temporary employment among the total employment Belgium 8.2 Hungary 8.5 (%, 2009) Bulgaria 4.7 Malta 4.8 Czech Republic 8.5 Netherlands 18.2 Denmark 8.9 Austria 9.1 Germany 14.5 Poland 26.5 Estonia 2.5 Portugal 22 Ireland 8.5 Romania 1 Greece 12.1 Slavonia 16.4 Spain 25.4 Slovakia 4.4 France 13.5 Finland 14.6 Italy 12.5 Sweden 15.3 Cyprus 13.4 England 5.7 Lithuania 4.3 Norway 8.1 Latvia 2.2 Turkey 10.7 Source: Adopted from Massarelli and Wozowczykeuropean (2009) reduction in the unemployment rates depends on many strategies and the policies designated by the government and the social partners. But the main focus should be the prevention of the long-term unemployment. Temporary workers may reduce short-term unemployment and boost short-term employments but for the economic and social development the main goal is to find a solution for the long-term unemployment. By providing short term working opportunities for a significant portion of the workforce for the whole year through the temporary work agencies, reduces long term as well as short-term unemployment. Although temporary agency employ- ment still accounts for a relatively small share of paid employment, the growth in temporary employment accounted for 10 % of total employment growth in the economy during the 1990s (Houseman and Kalleberg 2003). In Italy about 40 % of temporary workers have found a permanent job after one year. OECD reported on the regular job finding probabilities of young school leaves with little education in 1998. They find lower rates of regular job finding among Italian school leavers in temporary jobs than for the French. For agency workers McKinsey found the same figures for Italian agency workers as for French agency workers in 2000. Italy does comparatively well in the flow of temporary workers towards regular work (Zijl and Leeuwen 2005). Another impact of TAW can be explained as the power to bring the workers who seek a job and organizations that seek a worker together in the right place and on the right time. This in fact increases the long-term employability of the temporary employee and although indirectly positively affect the total employment rates (Neugarty and Storriez 2003). In many countries, to deal with the youth unemployment it has been considered that several techniques and politicies should be applied (Jansen and Uekxkul 2010). One of the several effects of TAW on the decline of unemployment is the capability of enhancing the employment chance of young labor force. As discussed before,

11 The Importance of Temporary Work Agencies in Turkish Labor Market and a. . . 235 TAW is a good opportunity for fresh employees or the students. Those employed as a temporary worker are likely to be employed by these organizations as a long-term worker a while later. For this reason TAW can be mentioned as an important instrument that increases the employment of the young workforce. 11.2.3 To Obtain Both Flexibility and Security in the Labor Markets One of the most significant aspects in the definition of quality of work is the flexibility and security in the job (Arellano 2009). During the 1980s EU considered flexibility in a macro scale and the decisions of the Council have been recommended for the member countries. Flexibility is important because it pro- vides following benefits (Su¨ral 2005): • Quick adaptability of the companies to the demands of the competition within or outside the country • Increasing the opportunities of employment • To obtain social inclusion: The encouragement of the women, young workforce with no working experience, handicapped people and retirees that may experi- ence some difficulties during the transition to employment • Prevention of the informal employment Providing the right balance between flexibility and security will support the competitiveness of firms, increase quality and productivity at work and facilitate the adaptation of firms and workers to economic change (Wilthagen and Tros 2004). According to EU Directive 2008/104/EC “Temporary agency work meets not only undertakings’ needs for flexibility but also the need of employees to reconcile their working and private lives. It thus contributes to job creation and to participa- tion and integration in the labor market” (EUROCIETT 2010). The views of the European Commission on actually striking a good balance between flexibility and security are fairly optimistic. Modernizing the way in which the labor market operates means finding a new balance between flexibility and security. This is reflected at community level in the framework agreement on part-time work, concluded by the social partners (Wilthagen and Tros 2004). 11.2.4 To Reduce Rates of Informal Unemployment The concept of informal employment is considered to be relevant not only for developing and transition countries, but also for developed countries, for many of which the concept of the informal sector is of limited relevance. A part of the

236 A. Beyhan Acar and G. Ordun growing “informalization” of employment may be attributed to the globalization process of the economy. This is because enterprises tend to respond to competitive pressure by resorting to mixed-mode labor arrangements, in which observance of labor regulations for some workers is combined with the use of non-standard, atypical, alternative, irregular, precarious, etc. types of labor or various forms of subcontracting (Hussmanns 2004). Much work in recent years has gone into better defining of the informal economy and informal sector, and into the improvement of statistics about the informal sector and informal employment. Informal employment comprises one half to three quarters of non-agricultural employment in developing countries. If agricultural employment is included, then informal employment comprises 93 % of total employment in India, for example, and 62 % in Mexico (Lund 2009). Nowadays it is possible to specify that in many EU-15 countries short term employment is directed by TAW. By the written contracts between short-term labor and TAW the labor fits to the demand of formal employment. This is considered to be the most significant determinant that decreases the rate of informal employment. As one of the EU Active Labor Market policies, TAW is appraised to be an important instrument to reduce the informal employment throughout the EU. 11.2.5 To Make Advantage for Disadvantaged Jobseekers By encouraging the employment of these groups one of the main social policies of EU and Active Labor Market is to prevent social exclusion as well as positive contribution to the labor market. Social exclusion has been defied in a number of different ways which may include all or some of the following elements: disadvantages in relation to certain norms of social, economic or political activity pertaining to individuals, house- holds, spatial areas or population groups; the social, economic and institutional processes through which disadvantage comes about; and the outcomes or conse- quences for individuals, groups or communities (Smith 2000). Depending on this definition, the social groups with low levels of employment demands, like retirees, students, fresh graduates and housewives are labeled as “disadvantaged groups”. Parallel to the persistence of youth unemployment, temporary work in Germany has become increasingly important over the last decade. The number of people employed in temporary work agencies has increased from 134,400 (all ages) in 1994 to 760,600 people in 2008, mainly due to a deregulation of the sector in 2004. While some policy makers are concerned about this development, fearing for decreasing wages and substitution effects, proponents claim that temporary work has a stepping-stone function bringing temporary agency workers into regular employment (Ehlert et al. 2012). Young people represent a significant share of the agency workforce in Europe. In particular, 46 % of agency workers in the Netherlands are below 25 years old, 37 % in Belgium, 33 % in Italy. For older workers, the proportion of agency workers over

11 The Importance of Temporary Work Agencies in Turkish Labor Market and a. . . 237 45 years old ranges from 10 % in countries such as Poland, Greece or Slovenia to nearly 30 % in the UK. In spite of this fairly varied panorama, the analysis shows the common trend of a growing number of older people working through temporary work agencies: in France, the proportion of older workers, over 50 years old, increased from 4.1 to 7.5 % between 1997 and 2007; in Belgium the proportion in 2007 was 5 %; in Italy the share of over 40 years old has doubled between 2002 (12.5 %) and 2011 (25 %) (EUROCIETT 2010). In Germany, Slovenia, France and Sweden there is a steep age profile with temporary contracts particularly concen- trated among the youngest (European Union 2012). 11.2.6 Stepping Stone Function for Permanent Employment One of the important reasons for increasing demand for TAW and the number of TAW agencies, is that job seekers evaluate TAW as a stepping stone function to pass into the long term employment status. The economic literature is focused on three main effects of TAW. One of them is, whether and how temporary agency work can be a stepping-stone from unem- ployment to regular jobs (Thommes and Weiland 2010). A number of reasons have been cited in the literature, on why TAW work may provide a bridge to regular employment for the unemployed. First, TAW workers are frequently recruited among the unemployed and are thus given access to paid work or entry-level jobs), otherwise often denied to them on the general labor market. Surveys among TAW workers show that one of the main reasons for taking up a job in the TAW industry is the inability to find a regular job (Kvasnicka 2005). According to the research findings, temporary agency employment significantly reduces the remaining time spent in unemployment and thus serves as a stepping- stone to employment. Additionally job-seekers can improve their human capital while being on assignment, while critics point out that the human capital effect may be low (Jahn and Rosholm 2010). Depending on the studies conducted within European countries by CIETT, it is stated that the temporary workers employed by TAW are offered long term employment by the organizations they work in. For example the ratio is 30 % in Spain and 41 % in Belgium (Storrie 2002). The average of EU that temporary employees employed by TAW pass through long-term employment status in one year is 43 % (EUROCIETT 2007). 11.2.7 Advantages for Both Employers and Employees It is common that research related with TAW, emphasizes the benefits for both employees and unemployed workforce seeking for a job. One of the reasons is to prevent the negative perception that employees working via TAW are experiencing

238 A. Beyhan Acar and G. Ordun disadvantages with the amount of salary and other working conditions comparing with the long term employees. This kind of work style is wide spreading in many countries. So it is crucial to analyze the positive and negative aspects of the practice in order to define a proper main regulation. Empirical studies on the basis of the countries help us to find out the main differences between them, also reveal the most positive references for both employees and unemployed workforce seeking for a job. HR departments themselves might encourage the use of temporary agency work in order to protect their manpower from (temporal or functional) overload in peak periods. They might also want to partly disburden its own staff of highly standard- ized and monotonous tasks in order to raise motivation among regular staff and to enable its own staff to address themselves to more challenging tasks, such as strategic ones. This can be achieved via employing temporary agency workers instead of other workforce, since the temporary work agency itself takes over the personnel function, such as recruitment, training, and compensation for its own temporary agency workers. Furthermore, if there is a HR department, there is an awareness of the instrument of temporary agency work (Thommes and Weiland 2010). Whether or not temporary agency work can improve the labor market outcomes of the unemployed has recently become the subject of both policy and research interest. Temporary work agencies provide many benefits including the enhance- ment of skills and experience of workers (Antoni and Jahn 2006). Many labor markets in Europe face a high degree of persisting, long term unemployment. Temporary employment agencies can provide an essential contri- bution to putting more people at work. In addition on average, 30–40 % of the agency workers are in long-term employment a year after their first agency work assignment (EUROCIETT 2006). From a theoretical point of view, there might be two broad reasons why temporary employment could represent a “springboard” into a stable job (Ichino et al. 2008): • More-able workers might signal their type by making themselves available for screening during temporary assignments; • Acquisition of human capital (general or specific), social contacts and informa- tion about permanent vacancies. As it’s shown in Fig. 11.1, in all the major agency work markets in Europe, agency workers persistently rate their satisfaction with agency work highly. The replacement of absent employees is the most traditional reason for hiring agency workers. Later on, the use of agency workers became a strategic element in adjusting the company labor force to changes and fluctuations in market demand. In another development, firms use temporary agency workers to act as a buffer to manage increased economic uncertainty (Blanpain et al. 2004). Companies turn to agency work when they require the maximum flexibility, whether dealing with unexpected demand or covering for absent staff. The agency work industry is being seen as the first option and most competent solution for many

11 The Importance of Temporary Work Agencies in Turkish Labor Market and a. . . 239 Fig. 11.1 TAW satisfaction rate (adopted from CIETT 2007) HR functions that were traditionally carried out internally by companies, allowing them to focus on their core activities and being confident that the expertise of the TAW industry will provide the right person, with the right skills at the right time. Two key reasons for using agency work by companies are meeting peaks and flexibility (CIETT 2007). • 81 % of companies look to agency work to manage economic fluctuations, • Agency work is the most appropriate solution to face needs in staff flexibility. 11.3 Development of TAW in the EU Agency work is not a new phenomenon: it has existed in Europe since at least the eighteenth century (Graaf-Zijl and Berkhout 2007). In the eighteenth century, Europe became the breeding ground for ideas of liberation and emancipation. Towards the middle of the nineteenth century the idea that capitalism was exploit- ative and that individuals were profiting from human labor began to gain currency. Employers, recruitment agents and all those acting as middlemen between labor and employment were naturally tarred with the same brush (Graaf-Zijl and Berkhout 2007). Over the last 20 years, there has been a growing concern over the perceived phenomenal growth of temporary employment. One type of work arrangement often associated with temporary labor, personnel supply services (PSS), has been growing rapidly at almost 20 % annually since the 1990–1991 recession (Morrıs and Vekker 2001). The PrEA (Private Employment Agencies) industry contributes to creating jobs and in effect reduces unemployment. It has created some 1.49 million new jobs in Europe between 1998 and 2006, accounting for 9 % of total job creation. Depending on Table 11.2, the number of TAWs in the EU can be seen between the years 1996 and 2006. In addition, the pace of job creation has accelerated over the past decade with 669,000. The total amount of PrEA jobs created in Europe between 2003 and 2006 and accounting for 7.5 % of total job creation. The people who work by TAW in the EU in 2009 can be seen as number and rate in Table 11.3.

240 A. Beyhan Acar and G. Ordun Table 11.2 The number of TAWs between 1996 and 2006 in the EU (1,000Â) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Austria 15 18 21 24 30 33 31 38 44 47 59 Belgium 44 51 60 63 71 68 66 66 73 78 88 Denmark 5677 8 10 10 11 13 17 21 Finland 9998 9 11 11 12 14 16 18 France 291 359 458 515 604 602 570 555 570 586 603 Germany 149 180 203 243 283 288 267 276 323 375 500 Hungary –––– – – 30 39 53 54 55 Italy 10 26 69 67 82 132 154 157 160 Luxembourg 2 2 2 3 4444445 Holland 147 163 180 186 183 178 169 154 157 176 207 Norway 7 9 11 11 11 12 11 10 12 15 24 Poland –––– – – – 19 25 27 35 Portugal 25 29 33 45 45 45 45 45 45 45 45 Spain 60 90 110 133 133 126 123 123 124 130 141 Sweden 10 14 18 24 42 38 37 29 30 32 37 Switzerland 21 24 30 34 39 38 37 36 41 49 61 England 682 775 696 761 1,027 1,027 1,036 1,111 1,175 1,219 1,265 Source: Adopted from EUROCIETT (2010) Table 11.3 The people who Country Number Rate (%) work by TAW in the EU EU15 2.628.570 1.5 Spain 676.800 3.4 Netherlands 240.800 3 France 599.620 2.2 1.6 Germany 595.300 1.5 1.5 Belgium 64.938 1.4 Ireland 30.000 1.3 Austria 55.737 1.2 Denmark 36.650 0.9 Finland 30.000 0.8 Portugal 45.000 0.5 Sweden 34.854 0.3 UK 600.000 0.3 0.2 Luxembourg 620 Italy 65.870 Greece 7.775 Source: Adopted from Vosko (2009) These figures are very much consistent with the findings of a McKinsey report16 published in 2000, which proved that the PrEA industry created 251,000 additional full time jobs between 1996 and 1998 (accounting for 6 % of total job creation) (EUROCIETT 2007).

11 The Importance of Temporary Work Agencies in Turkish Labor Market and a. . . 241 11.4 Research Methodology Turkey and Italy, Spain, Germany were included in the research. These countries were selected because Spain and Italy use different models for TAWs and in Germany TAWs’ legal system is more comprehensive or extensive than other EU countries. 11.4.1 The Objective of the Research Since temporary work, which is somewhat informally practiced in Turkey, does not have a legal basis yet. In this study we will compare the attitude for social aspects for TAWs in different dimensions in Turkey and three countries from the EU (Spain, Italy, Germany). Although TAWs are not officially legalized in Turkey, it is a known fact that various real or corporate persons engage in this type of activity. Yet no official statistics are available due to the unofficial operation of the system. Therefore analysis as to their likely impact on employment in Turkey is simulated in relation to the data on the three selected countries. The final part of the study we try to make a prediction for Turkey about the expected impacts on the workforce if the TAWs will be legalized. 11.4.2 The Importance of the Research A comparative study between Turkey and the countries specified before is impor- tant to find out the situation of Turkey depending on several variables. It is important to estimate the impact of TAW if it is legalized in Turkey depending on the analysis about the impact of TAW on different groups of labor force and on total employment status in countries, which TAW is legal. 11.4.3 The Variables The impact of temporary work agencies on the development rates of the employ- ment can be analyzed depending on several variables. In this study, the variables used in order to compare three European countries and Turkey are explained below: (a) Female unemployment and youth unemployment rates: Within this category total female and total youth unemployment rates are considered depending on the statistical data published by World Bank 1998–2009.

242 A. Beyhan Acar and G. Ordun (b) Total Unemployment Rates: Within this category total unemployment rates are considered depending on the statistical data for four countries published by World Bank 1998–2009. (c) The number of total employees employed by TAW in Germany, Spain and Italy for the years 1998–2009. The impact of TAW has been analyzed with the comparison of the total employees employed by TAW and the female, youth, total unemployment rates. In the panel data analysis the employees employed by TAW is used as the independent variable and the unemployment rates used as the dependent variables. 11.4.4 Hypotheses 1. Hypothesis: TAWs impact on total female unemployment is significant. 2. Hypothesis: TAWs impact on total youth female unemployment is significant. 3. Hypothesis: TAWs impact total unemployment is significant. 11.4.5 The Main Findings The findings about all selected variables described below. 11.4.5.1 Comparison of Total Female Unemployment and Youth Female Unemployment Depending on the World Bank’s statistical values between the years 1998 and 2009, women employment rates have been compared between Spain, Germany, Italy and Turkey. The statistical data about the selected countries are given in Table 11.4. Descriptive statistics about given variables are defined in Table 11.5. Depending on this study the mean of female unemployment is 11.74. The data given in Table 11.4 fits to normal distribution but as it is not homog- enous, instead of ANOVA analysis the nonparametric alternate Kruskal Wallis is used. Depending on the findings that are shown in Tables 11.6 and 11.7 the differences are significant and the highest female unemployment rate is in Spain, the lowest in Germany. In order to find out the differences between countries Tamhane’s T2 test is used. Depending on the findings that are shown in Table 11.8, female unemployment in Germany is significantly lower than the female unemployment rate in Spain. Also female unemployment rate in Turkey is significantly lower than Spain. No signif- icant difference is calculated between other countries and Turkey. Turkey’s female unemployment rate “9.8” is significantly lower than “12.4”which is the mean of other three countries as it’s shown in Table 11.9.

11 The Importance of Temporary Work Agencies in Turkish Labor Market and a. . . 243 Table 11.4 Women Total unemployment (female) % of female labor force unemployment rates of Germany, Italy, Spain and Germany Italy Spain Turkey Turkey between 1998 and 2009 1998 9.9 16.5 26.6 6.8 7.6 1999 8.9 16.3 23.1 6.3 7.5 2000 8.1 14.9 20.5 9.5 10.1 2001 7.9 13 15.2 11 11.2 2002 8.3 12.6 16.4 11.1 11 2003 8.8 11.9 15.9 11.6 14.3 2004 10 10.2 15 2005 10.9 10.1 12.2 2006 10.2 8.8 11.6 2007 8.8 7.9 10.9 2008 7.7 8.5 13 2009 7.3 9.3 18.4 Source: Adopted from The World Bank (2013) Table 11.5 Descriptives—women unemployment rates (1998–2009) N Mean Standard deviation Standard error 1.00 (Germany) 16 8.9000 1.124924 0.36991 0.79059 2.00 (Italy) 16 11.6667 3.024546 1.49834 0.62075 3.00 (Spain) 16 16.5667 4.819908 0.66550 4.00 (Turkey) 16 9.8333 2.365792 Total 64 11.7417 4.256901 Table 11.6 Test statisticsa,b Womenun Chi-square 23.253 3 df 0.000 Asymp. Sig. aKruskal Wallis test bGrouping variable: country Table 11.7 Ranks Country N Mean rank Womenun 1.00 12 13.38 2.00 12 26.33 3.00 12 39.38 4.00 12 18.92 Total 48 The total unemployment rate in Spain and Italy is greater than Turkey so depending on this issue it is expected to have higher women unemployment rate in these countries. Although it is not expected to have a higher unemployment rate for women in Germany comparative to Turkey, the results might be related with the high level of informal employment rate in Turkey. In Turkey most of the new jobs created are in the “informal” (unregistered) economy. Informal work is more

244 A. Beyhan Acar and G. Ordun Table 11.8 Multiple comparisons Country (I) Country (J) Mean difference (IÀJ) Standard error Significant 1.00 2.00 À2.76667 0.93155 0.059 3.00 À7.66667* 1.42878 0.001 4.00 À0.93333 0.75622 0.800 0.93155 0.059 2.00 1.00 2.76667 1.64265 0.046 1.10848 0.514 3.00 À4.90000* 1.42878 0.001 1.64265 0.046 4.00 1.83333 1.54996 0.003 0.75622 0.800 3.00 1.00 7.66667* 1.10848 0.514 1.54996 0.003 2.00 4.90000* 4.00 6.73333* 4.00 1.00 0.93333 2.00 À1.83333 3.00 À6.73333* *The mean difference is significant at the 0.05 level Table 11.9 One-sample t-test Test value ¼ 9.8 95 % confidence interval of the difference t df Significant (two-tailed) Mean difference Lower Upper Womenun 3.382 35 0.002 2.57778 1.0306 4.1250 Table 11.10 Youth Germany Italy Spain Turkey unemployment 15–24 (female) 1998 8.2 38.4 43 12.8 1999 7.9 38.3 36.9 14 2000 7.5 35.3 32.9 11.9 2001 7.1 31.6 27 14.4 17.1 2002 8 31.6 27.3 18.9 20.7 2003 8.6 30.9 27.2 20.6 2004 10.8 29 26.4 20.6 2005 14 27.4 23.5 20.8 2006 12.6 25.3 21.6 21.2 2007 11.1 23.3 28.1 25 2008 10 24.7 25.8 2009 9.8 28.7 36.4 Source: Adopted from The World Bank (2013) widespread for women in all areas of work. It is reported that in 2008 60 % of working women and 39 % of men had no social protection (ILO 2009). Youth female unemployment rates 1998–2009 are given in Table 11.10.

11 The Importance of Temporary Work Agencies in Turkish Labor Market and a. . . 245 Table 11.11 Descriptives— N Mean Std. deviation Std. error youth unemployment female 12 9.6333 2.15969 0.62345 1.00 2.00 12 30.3750 5.01183 1.44679 3.00 12 29.6750 6.29475 1.81714 4.00 12 18.1667 4.07193 1.17546 Total 48 21.9625 9.79133 1.41326 Table 11.12 Test statisticsa,b Youthunfemale Chi-square 38.628 df 3 Asymp. Sig. 0.000 aKruskal Wallis test bGrouping variable: country Table 11.13 Ranks Country N Mean rank Youthunemp. female 1.00 12 6.79 2.00 12 37.25 3.00 12 35.42 4.00 12 18.54 Total 48 Descriptive statistics are calculated depending on the variables defined in Table 11.10. Depending on the findings that are shown in Table 11.11, the mean of youth female unemployment is 21.96. The data given in Table 11.10 fits to normal distribution but as its not homog- enous, instead of ANOVA analysis the nonparametric alternate Kruskal Wallis is used. Depending on the findings that are shown in Tables 11.12 and 11.13, significant differences have been calculated between countries. The highest youth female unemployment rate is in Italy. The lowest rate is in Germany. In order to find out the differences between countries Tamhane’s T2 test is used. Depending on the findings that are shown in Table 11.14, youth female unemploy- ment rate of Germany is significantly lower than other countries. The youth female unemployment rate of Turkey is significantly lower than Spain and Italy; signifi- cantly higher than Germany. 11.4.5.2 Comparison of Total Unemployment The data total unemployment rates for four countries 1998–2009 are provided by World Bank statistics and specified below:

246 A. Beyhan Acar and G. Ordun Table 11.14 Multiple comparisons Country (I) Country (J) Mean difference (IÀJ) Standard error Significant 1.00 2.00 À20.74167* 1.57540 0.000 3.00 À20.04167* 1.92111 0.000 4.00 À8.53333* 1.33057 0.000 1.57540 0.000 2.00 1.00 20.74167* 2.32275 1.000 1.86411 0.000 3.00 0.70000 1.92111 0.000 2.32275 1.000 4.00 12.20833* 2.16419 0.000 1.33057 0.000 3.00 1.00 20.04167* 1.86411 0.000 2.00 À0.70000 2.16419 0.000 4.00 11.50833* 4.00 1.00 8.53333* 2.00 À12.20833* 3.00 À11.50833* *The mean difference is significant at the 0.05 level Table 11.15 Total Germany Italy Spain Turkey unemployment rate (% of labor force) 1998 9.2 12.1 18.6 6.9 1999 8.4 11.7 15.6 7.7 2000 7.7 10.8 13.9 6.5 2001 7.8 9.6 10.5 8.4 2002 8.6 9.2 11.4 10.4 2003 9.3 8.9 11.3 10.5 2004 10.3 7.9 11 10.8 2005 11.1 7.7 9.2 10.6 2006 10.3 6.8 8.5 10.2 2007 8.6 6.1 8.3 10.3 2008 7.5 6.7 11.3 11.4 2009 7.7 7.8 18 14 Source: Adopted from The World Bank (2013) Table 11.16 Descriptives— N Mean Standard deviation Standard error total unemployment 1.00 12 8.8750 1.18638 0.34248 2.00 12 8.7750 1.97306 0.56957 3.00 12 12.3000 3.48268 1.00536 4.00 12 9.8083 2.10560 0.60783 Total 48 9.9396 2.67945 0.38675 Descriptive statistics about the total unemployment rates that are shown in Table 11.15, are calculated in Table 11.16. Depending on the data the mean is 9.9. To find out if there are any significant differences between specified countries Kruskal Wallis test is used. Depending on the findings that are shown in Tables 11.17 and 11.18, significant differences among countries are calculated. Tamhane T2 test is used in order to find out the significant differences among specified countries.