State aid bypasses Kurds, workers

The Covid-19 epidemic in Turkey has triggered a massive wave of unemployment, as well as adding to the regional disparities which existed pre-epidemic.  According to an article by Mr. Zulfikar Dogan at Ahval, Kurdish majority provinces were stared of aid, leading to rising bankruptcies of small businesses.  A new report by let-wing workers union DISK finds that 36% of respondents to its survey complain of income losses.  The inadequate state response to Covid-19 is harming AKP’s votes, claims a new poll by left-wing Gezici Survey Agency.  Istanbul Economic Research which polls the nation monthly on hot topics finds economic distress and fears of unemployment lead national concerns.

On March 18, Turkey unveiled a relief package, dubbed the Economic Stability Shield, worth 100 billion Turkish liras ($15.4 billion), which included debt payment delays and tax cuts across various sectors to limit the economic fallout from coronavirus.

These measures entailed certain regulations, including sanctions and penalties, that also forced private banks to increase lending. Ankara attempted to prop up the economy by postponing payments to the Social Security Institution (SGK), and extending the time frame for facing legal recourse for outstanding loan debt to banks.

In truth, Turkey was caught off guard by the pandemic, because the country’s budget had already been wiped out. As such, it was unable to provide money to anyone with the exception of 1,000 liras ($145) cash aid to 2 million families in need. Despite the fact that some 5.5. million workers in Turkey left unemployed by the pandemic were given a three-month allowance well below minimum wage, the Unemployment Insurance Fund coffers were quickly depleted.

There was an expectation that Erdoğan would extend the three-month allowance, but the government opted for only one month, despite freshly granted authority to the Turkish president for a such a move in an omnibus bill approved in April.

While it is apparent that Turkish citizens have not gotten the help they needed from their government, the situation is even worse for residents of the country’s traditionally neglected and underdeveloped Kurdish majority east and southeastern regions, where a large majority of workers and employers have failed to receive any stipends, tax exemptions or postponement on outstanding debt.

Earlier this month, Erdoğan said that through his government’s aid programme, a total of 24 billion lira had found its way into the pockets of Turkey’s population and that the state was supporting the dynamism of Turkey’s entrepreneurs and businesses.

A new field study conducted by the Diyarbakır Chamber of Commerce and Industry (DTSO) shows that the region certainly is not receiving much of that support.

The survey conducted with 107 businesses between May 11 and May 22 revealed that 78.2 percent of businesses in the region had been negatively affected by the pandemic. The poll found that many businesses either decreased their production capacity by half or shut down entirely, the latter a route taken by 53.7 percent of those surveyed.

Only 7.3 percent of businesses were able to continue production with no changes and 69 percent of them have been unable to pay rent for their facilities for months, the DTSO survey said.

The poll also found that a majority of workplaces around Diyarbakır failed to receive support for short-term employment allowance, debt postponement and special loans from banks, with most applications being either not receiving a response or being denied.

The survey showed that, of the 2,696 of a total of 5,604 workers employed in 107 workplaces who applied for short-term employment allowance, only 13,37 received the three-month payment.

“This situation has worsened Diyarbakır’s unemployment problem. A total of 60.9 percent of workplaces were unable to pay their rent, bills, taxes, social insurance premiums, salaries, bank loans and debt,’’ the DTSO found in its study.

“The region that already had difficulty in attaining finances prior to the pandemic, has been faced with even greater financial problems,’’ it said.

According to DISK report, 25% of the workers polled in its survey have seen rising personal debts, with 16.5% unable to make payments on credit card expenditures. The saddest part of the survey reveals that 40% of the workers have been forced to buy cheaper food items to make ends meet.

The July survey of Istanbul Economic Research finds more 50% consider economic distress as their utmost concern. 60% think the economy is headed for the worse in the next 3 months.  

Erdogan’s selective approach to distributing state aid has caused a rising backlash as evidence by recent polls.  According to Gezici survey, urban women and the Z Generation have largely abandoned AKP.

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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and and has contributed to the financial daily Referans and the liberal daily Radikal.