Labor Market Flexibility

Labour force productivity, as the most fundamental component of Total Factor Productivity, is naturally directly affected from the Labour Market platform. For the labour supply to be able to respond optimally to the demand, it is a must for the market inflexibilities in the labour market to be eliminated. The incapability of reducing the labour market inflexibilities causes unemployment to becoming more and more “structural” and transforming into a structure in which it is not possible to reduce unemployment by traditional supply methods. Qualification mismatch, the “high levels of wage taxes” besides the base pay, concentrated unionisation in spite of the sporadic collective bargaining structure restrict the shadow price task of the wage in the labour market and prevents optimal resource distribution. The significance of the flexible labour market, that has a direct impact on competition and level of productivity, in terms of sustainable growth is obvious.

TÜSİAD Social Affairs Committee
Employment and Social Security Working Group