Employment incentives play a crucial role in shaping a country’s labour market by fostering job creation, inclusivity, and economic growth. In Türkiye, these incentives have evolved over the years to address various employment challenges, targeting specific groups such as women, youth, persons with disabilities, long-term unemployed, unemployment benefit and social assistance recipients, and those with vocational qualifications. Rising wage costs have also necessitated the introduction of various employment incentives to alleviate the financial burden on Turkish employers, encouraging them to maintain and increase their workforce.
The Unemployment Insurance Fund, administered by the Turkish Employment Agency, has been the primary source of financing for many of these incentives, indicating a long-term commitment to using these funds to support employment initiatives. Most incentives funded by the Unemployment Insurance Fund are provisional, designed to address specific economic conditions or employment challenges for a limited period. In contrast, the Treasury generally funds indefinite employment incentives, such as those for the employment of persons with disabilities, the employment of recipients of social assistance, and supporting employers who pay their insurance premiums regularly.
The structure of incentives has always involved reducing employers' social security and/or unemployment insurance premiums, based on a certain percentage or a specified amount calculated over the number of premium days, providing financial relief to encourage hiring. Even wage subsidies have been implemented through deductions from the employer's premium debts, rather than through direct cash transfers. The Social Security Institution thus becomes the one-stop enforcer of incentives, while employers are provided with a single point of standardized and specialized service delivery.
Türkiye's employment incentives mostly focus on specific groups to maximize labour market impact. Women and youth are primary targets, given their potential to enhance participation and drive growth. Women often face workforce barriers, while youth struggle with higher unemployment rates. Individuals with vocational qualifications are also targeted to ensure skilled labour utilization, promoting a competitive workforce. Social assistance recipients receive incentives to transition from welfare to stable employment, reducing dependency on social support. Persons with disabilities are supported with specific incentives to promote their employment and ensure inclusive workplaces. Additionally, unemployment benefit recipients are encouraged through incentives to facilitate a quicker return to work, reducing unemployment duration. As an example from the employer side, health and safety in workplaces defined as very dangerous are awarded support through reduced premium rates.
Another key aspect of Türkiye's employment incentives is the requirement for additional hiring beyond previous periods' employment numbers. Many incentives stipulate that employers must hire new employees in addition to their existing workforce levels. This ensures that the incentives lead to actual job creation rather than merely subsidizing existing positions, thereby promoting genuine growth in employment and contributing to economic development. As another common requirement for all incentives, employers must ensure they comply with the basic rules of the Social Security Law, such as paying premiums on time and in full, not employing unregistered workers, and having no overdue premium debts or ensuring that any existing debts are restructured and installments are paid on time.
The duration and amounts of employment incentives in Türkiye vary widely to address different employment challenges effectively. Incentives like those for the employment of women, youth, and vocationally qualified individuals can last up to 54 months, offering substantial support to employers. For instance, this incentive can cover up to 20.5% of the gross upper limit of wages subject to social security insurance. In contrast, incentives such as those for the employment of social assistance recipients are typically provided for 12 months, with similar support rates of 20.5% of the gross minimum wage. Additionally, unemployment benefit recipients can receive support equivalent to 33.5% of the gross minimum wage for the remaining duration of their unemployment benefits. There have also been a few important employment incentives applied with a support rate of 37.5% calculated over different multiples of the gross minimum wage, reflecting the government's adaptability to specific economic conditions.
Turkish employment incentives have been sensitive to specific sectors, reflecting a more tailored approach to economic challenges and opportunities. For instance, the incentive for the food and beverage sector during the pandemic illustrate a response to sector-specific challenges. The additional employment incentive was applied with higher payments to seize opportunities in the manufacturing and IT sectors, supporting these critical industries with financial assistance to encourage growth and competitiveness. New types of incentives have also been introduced in response to economic conditions, such as the normalization support to facilitate the transition back to normal working hours post-pandemic.
Overall, the evolution of Türkiye's employment incentives demonstrates both a continuity in strategic focus and an increasing adaptability to changing economic and labour market conditions.
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