Lower unemployment rate & lower employment rate

March unemployment rate is 13.2%… March statistics are expected to provide a clearer picture on the impact of the COVID-19 outbreak as statistics cover February-March-April period. However, the unemployment rate in March stood at 13.2% compared to 14.1% in the same month of the previous year. The decrease in unemployment rate in March was limited as the decrease in the labor force since last year was high at 2.2 million. The decrease in unemployment rate, which was calculated by proportion of the unemployed to the labor force, showed a dramatic decline compared to the previous year, mostly due to people who are ready to work but have no hope to find a job. In March, number of people out of labor force has increased 3.3 million while 1.2 million of them were discouraged workers. The unemployment rate is 16.4% according to the broad definition, which we calculate by adding these 1.2 million to both unemployed and labor statistics. This rate was 15.2% in the same month of last year. When all people ready to work but not seeking a job are added to the definition, rate rises to 22.76%.

The biggest loss is in the service sector… Seasonally adjusted unemployment rate increased from 12.7% to 13.0% from the previous month. In addition, in order to analyze the effects of the epidemic more accurately, it would be useful to look at the employment rate, which is the ratio of employment to the civilian population over the age of 15. Employment rate, again on a seasonally adjusted basis, decreased by 1.7 points in March to 42.6%. From February to March, which includes the information for the first month of 2Q20, 21K out of 1.3M employment loss was seen in agriculture, 85K in industry, and 694K were in the service sector, the latter being affected more rapidly and deeply than other sectors. Details of service sector according to seasonally adjusted data are not provided by Turkstat but out of 903K annual loss in service sector, 306K losses were caused by the wholesale and retail trade sector and 228K were from accommodation and food services as expected. We have seen hiring of 103K people in education, finance, healthcare and public administration services in March compared to last year.

Improvement in the data might be earliest by the last quarter… In March, the workforce decreased by 6.9% compared to the previous year and employment decreased by 6.0%. Continuing this meager course for another 3 months will cause the unemployment rate to fall below 13.0%. However, this will cause the employment rate, which hovered over 46% in the same period last year, to remain at around 42%. Although various measures have been taken to protect employment, both on the basis of companies and by lending various credit opportunities provided by banks to the condition of not reducing employment, the effects of the epidemic on the employment market are clearly visible as we look at the details of the data. Having a healthy economic opening and not having a second wave pandemic will bring a gradual improvement in labor market, but we do not expect that the visible recovery will occur without a permanent increase in growth and production rates. This suggests that, according to our expectations, the employment rate may enter a trend of permanent increase in the last quarter of the year at the earliest.