Erdogan Warned of Job Destruction as Turkey Plans Virus Aid Cut

Turkey’s small businesses warned President Recep Tayyip Erdogan that ending pandemic support could deliver a severe drop in income for workers and major job losses if firms go bankrupt.

Erdogan said last week that government payments to employees whose place of work has been partially or fully shut by the health emergency will be given “for the last time at the end of March.” A ban on redundancies will be retained, but the changes set alarm bells ringing for the small and medium-sized firms which employ nearly 74% of Turkey’s total workforce.

Ending the so-called short-time working allowance could push employers to put staff on unpaid leave, condemning them to a smaller government paycheck of $200, or half the monthly minimum wage.

Under the current arrangement employees get close to full salary with around 60% coming from the government. About 1.3 million workers will see a dramatic drop in income should the government stick to its pledge to end the program.

Workers’ representatives who met Treasury and Finance Minister Lutfi Elvan in Ankara on Monday urged the government to continue supporting businesses and not collect social security premiums to avoid a spike in bankruptcies and unemployment, according to the TESK confederation, which participated in the meeting.

Turkey has provided more than 30 billion liras ($4.2 billion) to hard-hit small businesses to help pay salaries and rents rent but it was unclear whether that would continue. The government said some new incentives were being prepared.

Official unemployment rose to 12.9% in November. The government may exclude those on leave from their job due to the pandemic from the unemployment statistics if they haven’t worked for more than three months, people familiar with an upcoming change in the jobless data told Bloomberg.

©2021 Bloomberg L.P.

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