Cihan Sultanoğlu's speech in the 5th İzmir Economics CongressOct 31, 2013
Cihan Sultanoğlu, UNDP Assistant Administrator and Director of the UNDP Regional Bureau for Europe and the Commonwealth of Independent States, delivered a speech during the 'Inclusive Development Policies' panel in the 5th İzmir Economics Congress.
Excellencies, distinguished participants, colleagues,
It is an honor for me to be here today to participate in the 5th İzmir Economic Congress together with a distinguished selection of panelists. I hope to contribute today some useful perspectives harnessed from the UN’s, and UNDP’s experience.
As 2015 approaches, we near the goal date for our Millennium Development Goals, and we are now deep in the process of defining the Post-2015 Development Agenda. UNDP, together with our UN partners, have conducted very extensive surveys and consultations with people worldwide to identify major concerns and priorities.
Turkey is one of the 88 countries where this process took place, along with 13 other countries in the region of Eastern Europe and Central Asia. This region alone engaged 150,000 women and men from various backgrounds and in difficult circumstances. In November, the Turkish Government will host a regional consultation together with the UN, to take the findings in the region forward.
Worldwide, we have engaged over 1.4 million people, asking them what kind of world they want. They have stressed their frustrations with various forms of inequality and expressed the desire for dignity and respect for themselves and all people. Even though many countries overall growth rates are recovering, the prosperity is not perceived as being shared by the many.
Until now there’s been no clear global policy agenda with which to tackle inequalities. The people we have engaged send a clear message that they want governments and others to work to reduce inequalities between women and men, rural and urban areas, among ethnic and religious groups and between the richest and poorest.
At UNDP, we believe there is a need, on the basis of these clear findings, to promote an agenda of “shared prosperity”.
Shared prosperity must be taken into account in the post-2015 development agenda in two ways. First, by taking on the question of economic growth equity. And second, by taking steps toward ensuring that prosperity is shared not only among current generations but also with future generations. The more than 1.4 million voices the UN system has engaged on the post-2015 development agenda send a clear message that they want governments and others to work to reduce inequalities.
Inequality needs to be addressed through a three-pronged strategy:
(1)Moderating income inequality;
(2)Closing gaps in Education, Health and Nutrition; and
(3) Tackling prejudice and social exclusion and unequal opportunities.
Equal opportunity cannot be achieved in an environment where outcomes are deteriorating. Put simply, focusing on how the poor and socially excluded can access jobs is meaningless in an economy that is not generating jobs.
Currently, the richest ten percent of people in the world own 85 percent of all assets, while the poorest 50 percent own only one percent. The conventional development wisdom of the 1950s and 60s equated development merely with economic growth assumed “trickle down”. As well all know, this has been decisively proved to be insufficient.
Since 1990, UNDP has advocated for the concept of human development; the idea that growth alone is not the aim, but that equality and inclusion in decision making are equally key. When we talk about inclusive development we essentially talk about the interplay between growth, inequality and inclusion.
The concept of inclusive development has been playing an increasingly prominent role in steering the global and national Turkish development debate in recent years. Many national governments are attempting to design and implement transformational policies to enhance the inclusiveness of development, and UNDP, as the UN’s development network, works in partnership with governments and civil society groups around the world on the myriad and multi-dimensional aspects of inclusive development.
Let us take a look at the inclusiveness of economic and social policies in Turkey.
The economy has grown remarkably in the last decade. Between 2002 and 2012 the economy grew on average by 5.1% per despite an unfavorable global economic environment and shrinking external demand.
Within this period, absolute poverty indicators point to important progress. In 2006, people living with less than $1 per day became statistically non-existent. More importantly, the percentage of individuals living with less than $4.30 per day decreased from 30% in 2002 to 2.8% in 2011.
Absolute poverty rates in urban areas are much lower than the national average, which implies that rural poverty can still be considered a challenge for Turkey’s inclusive development pathway.
Relative poverty rates in Turkey tell a similar story. In 2006, the ratio of people living with less than 60% of the median household income level was close to 30%, but declined to 23% in 2012. According to TURKSTAT, the country’s GINI coefficient declined from 0.43 in 2006 to 0.40 in 2012, even though the decline was from a very high base and it remains high ---- and the concentration of wealth at the very top may have remained the same!
Nevertheless, from an income distribution point of view, the statistics appear to tell an encouraging story about the increasing inclusiveness of growth. We plan to explore this in our forthcoming UNDP National Human Development Report on Inclusive Growth.
Despite the growth of the economy and the significant reductions in poverty rates, women’s participation in economic and political life is still a pressing issue for Turkey. Women’s labor force participation is only 31.6%. This is the lowest figure among the G20 economies, and it raises some questions about the Turkish economy’s ability to create equal employment opportunities for women and men.
According to TURKSTAT, a male employee with a higher education degree is likely to be paid 20% more than a female employee with the same educational qualifications. When the remuneration level of employees with vocational education is considered, the difference goes up to 30% in favor of men. Thus in Turkey women find it hard to participate in the labor force, and when they participate they are paid less than men.
It is also not optimizing its economic growth potential since studies show that a high women’s economic participation rate significantly increases the overall growth rate of an economy. Turkey has many assets that it can capitalize on. Sadly, women appear to be by far the most underutilized asset of its economy.
I am aware of the positive efforts that the Government has taken the boost women’s employment. Establishing kindergartens in industrial zones and social security premium schemes that discriminate positively towards women are among these. However it is clear that more needs to be done.
Youth is another area where Turkey has room for improvement in terms of inclusive development. As of July 2013, the youth unemployment rate was 18%, almost twice as much as the headline unemployment rate of 9.3%. The youth unemployment rate in urban areas was 21.2%. Thus one in every five job-seeking young persons in unemployed in urban areas. As a country with an urbanization rate that is only second to the Republic of Korea globally, Turkey cannot afford youth unemployment.
Returning back to the brighter side of Turkey’s inclusive economic and social policies, the increase in public social expenditures is a promising sign indicating that the benefits of economic growth are being shared. In 2011, social assistance expenditure, while still modest, accounted for 1.18% of the GDP compared to 0.86% in 2006. The establishment of the Ministry for Family and Social Policies – with which we in UNDP enjoy excellent cooperation – was also clearly a step in the right direction, bringing further coherence to the design and implementation of inclusive social policies.
Let me conclude by saying that UNDP believes that Turkey is at very promising yet challenging stage of its development journey. From an economic point of view, boosting Turkey’s entrepreneurial and innovative performance will be critical to overcoming the barriers of inclusive growth and development. Turkey has been implementing ambitious entrepreneurship and innovation policies which will make the economy more productive and create more opportunities for all. In pursuing its entrepreneurship and innovation policies, I strongly recommend that Turkey takes more inclusive approach, giving many more opportunities to youth and women in particular.