High-level Conference on Turkish and European experience in dealing with unregistered work through social dialogue

Ankara, 22-23 February 2007

Closing Remarks

Friedrich Buttler

ILO Regional Director for Europe and Central Asia

It was a pleasure to learn from your rich discussion, to take notes for the conclusion of the conference. Let me summarize them as follows:

This project has much contributed to raising awareness about undeclared work in Turkey through tripartite cooperation at the national and at selected provinces' levels. It has provided enriching and encouraging experience on European practices to overcome undeclared work and about options on how to address the issue in Turkey. Social dialogue was useful to analyze the context, to clarify the role of governments, employers' associations, trade unions and other stakeholders in making use of the options available at national, local and sector levels.

Undeclared work is so widespread in Turkey and was frequently described in this conference as a societal and economic disease. Consequently, national and local ownership of every approach to overcome the situation is crucial, not only in Turkey. As the world Commission on the Social Dimension of Globalization convened by the ILO noted, informality is increasing in many parts of the world in parallel with contemporary globalization. It is for this reason that our Turkish constituents, the European Commission and the ILO wished to deal with mainstreaming undeclared work into formal employment through the full involvement of the tripartite partners in the country. They join in common interests concerning the subject matter, although not always for the same reasons. Among the common interests, we find the desire on the part of the stakeholders to join the European Union.

The tripartite partners brought in their knowledge of the economic and social reality and of the factors, which encourage unregistered work. The social partners agreed on many of these factors, on others they still have different views. The analysis revealed a number of factors which could be addressed by improved governance, such as incentives to evade taxes and non-wage labour costs, high interest rates and barriers to register newly-founded enterprises, under-resourcing of inspection services and high costs of imported raw materials. Other factors such as the pressure, stemming from a high level of unemployment, on workers to accept jobs that pay less than the minimum wage and offer no social protection will only become less important with more growth, higher productivity and thus more and better employment.

It is equally important to recognize the factors, which encourage unregistered work and on which employers and workers have not yet agreed and to work further on those issues. On the one hand, there is the unionists' complaint about difficulties they face when attempting to organize workers, and on the other, the cost of severance payments when laying-off registered workers. Both made an important point, the second is related to disincentives to hire registered workers as compared to unregistered ones, the first deals with the need to further implement the ILO Conventions on freedom of association. Here, I am highlighting some examples from the very rich report presented to our conference by Professor Jason Heyes, which underscore the need for a comprehensive approach addressing the macroeconomic framework, employment and active labour market policies, education and vocational training to improve the employability of the workforce, tax policies and the financing of the social security system, effective integrated and prevention oriented labour inspection services and the rule of law. Competitiveness, productivity and decent work can only grow in conditions of good governance aiming at decent work for all, women and men.

We must particularly insist on the importance of the gender dimension of all the efforts needed to create more and better registered employment, keeping in mind the very low, and in some urban locations even extremely low female labour force participation, and even lower female employment rates. This leads to the fact that 3 in 4 undeclared workers are female workers, if you take all together. Where the line between formal and undeclared work is drawn, for instance with or without unpaid rural family workers, two main conclusions have to be drawn from this observation: first of all, paid employment opportunities for women in the formal economy are particularly rare and policies aiming to create an investment-friendly environment must therefore be given the highest priority, and secondly, women will sufficiently benefit from more and better job offers only if all the above-mentioned elements of a comprehensive approach mainstream the gender dimension.

In the excellent chapter on lessons learned the report presented to this conference further elaborates on the future path to be followed together. Let me summarize some of them without being exhaustive:

- Many of the problems related to the informal economy and thus unregistered work and the inherent risks for workers, employers and governments develop into vicious circles, from which the parties involved face enormous difficulties to extricate themselves, namely the factors forcing informal business owners to continue competing in low-cost, low value-added sectors, poverty leading workers to accept informal jobs, growing informality facing governments with increasing constraints to finance necessary services to overcome the causes of undeclared work. It was said yesterday that the deficit of Turkish social security institution could be dramatically reduced if only 50% of the unregistered became registered.

- Hence, a broad and inclusive dialogue on a broad range of interrelated issues was seen as necessary to bring together all the actors. Providing voice and representation to workers and employers in unregistered employment was recognized as an important component of any strategy designed to target unregistered work; established workers' and employers' organizations have the local knowledge and experience to build partnerships with existing community groups and organizations whose members include those in the informal economy, and the report explains strategies to reach out to them.

- Nevertheless, while social dialogue brought the partners together to identify issues to work on and to start developing recommendations, work to successfully reduce informality has only just begun. Hence a long-term commitment to implement strategies and a strong national and local commitment is essential. This commitment has been expressed in the Tripartite Declaration on Social Dialogue and Unregistered Employment of March 2006 and must serve as a solid basis for future action.

- In this context, the national-level project "Combating Informal Employment" (KADIM), led by the Ministry of Labour and Social Security in coordination with the social partners and a number of key government and non-governmental agencies, facilitating the transition of workers and employers from the formal to the informal economy has to be mentioned and commended as it addresses a number of factors that promote informal employment and the illegal use of foreign workers. The Prime Minister's Communiqué on Informal Employment from October 2006 gives full support to this initiative. Lessons learned from the existing project should indeed help the national partners to extend the scope of similar activities to all Turkish provinces.

The conclusions and recommendations of the report to this conference provide us with a number of elements to be included in a further comprehensive strategy aimed at maintaining the momentum reached through the efforts made by the partners in this project.

I reiterate that the overall situation of jobless growth, low labour force participation rates and particularly low female employment rates must be the main concerns. Creating decent employment opportunities is key. In compliance with ILO Convention No. 122, ratified by Turkey, it is essential to pursue an active policy to promote full, productive and freely chosen employment. The results of this project suggest that there must be a strong regional development policy in order to promote employment in less developed areas. And there must be employment promotion for all age groups. If one cannot accumulate through years of contributions to get a pension the incentive to pay contribution is simply not given.

Employers create employment. And the dynamics of employment creation is particularly with small and medium enterprise development and with new entrepreneurship. The ILO Recommendation Concerning General Conditions to Stimulate Job Creation in Small and Medium Enterprises No. 189 highlights systematically building an environment conducive to the growth and development of SMEs. Employment strategies for decent work country programmes establish the framework of basic concepts, approaches and tools in which enterprise development is embedded (see the Annex). The report to this conference particularly highlights the need for simplification of registration and licensing procedures for new enterprises including administrative measures to facilitate their implementation as well as awareness raising and educational strategies targeting small informal entrepreneurs.

Youth employment must be promoted as a high priority. Turkey has made extraordinary efforts and has reached outstanding results in combating the worst forms of child labour. The next peer group of working children is youth. If skilled young people do not find promising labour market perspectives, why should children and their parents make an effort to get out of child labour? Education and vocational training systems in Turkey have to be reviewed in order to better match the needs of the labour market with education provided. In addition, active labour market policies can play a significant role by promoting the job-placement and job-matching capacity of ISKUR. Equally, private employment agencies should join in the same objectives.

Policy coherence is of utmost importance. The Ministry of Labour and Social Security, which is spearheading policies for more and better registered employment in the Turkish government, needs the support of the Ministries of Finance, Industry and Trade and Education as well as all the others, whose policies have a significant bearing on the labour market. Therefore, I could not agree more with the conclusions of your project, policy coherence and coordination between different ministries and other public agencies both at national and local level is essential for success in mainstreaming the informal economy into the formal.

As has been impressingly demonstrated by the tripartite partners for the three pilot provinces yesterday, this project, which came to birth as a follow-up to the ILO Resolution concerning tripartism and social dialogue from 2002 has much benefited from the commitment of the social partner organizations at both national and provincial level. Hence it is equally important to draw conclusions on their continued contribution. The report to this conference highlights the need for strengthening the institutional framework of social dialogue such as the Economic and Social Council and the Tripartite Advisory and Provincial Employment Boards and it makes reference to sectoral social dialogue to address informal work in sectors such as textiles, manufacturing and construction. It will be equally important to further develop and implement the legal framework of freedom of association and the right to bargain collectively in compliance with ILO standards and European practice. Freedom of association includes the free choice not to be associated.

Prof. Stanculescu has taught us that It will be important to reach a common understanding on what is counted as unregistered work and what is not and to build a solid data base on this. How to deal for instance with workers, who have to change clothes twice a 14 hours working day who have two or three jobs in a registered and in unregistered work places.

As requested by the project partners tripartite Declaration of 5 March 2006, the social partners should be involved in formulating and implementing government strategies and policies and in working with the government agencies addressing unregistered work, but they also take their own appropriate measures within their own competencies. In this context, they design strategies to reach out to the informal sector, representing the interests of informal economy actors and developing relevant services to them. Employers' organizations services could comprise a wide range aimed at getting out of the informality trap from training on productivity improvement, facilitating access to finance, market information, technology and social security, occupational safety and health, promoting women's entrepreneurship etc. Employers' organizations could promote corporate social responsibility throughout production chains including informal enterprises. Trade unions could sensitize formal and informal workers on the risk of unregistered work, they could further strengthen their expertise in employment related policies, pay special attention to youth and gender mainstreaming and develop services for informal workers for working out of informality and poverty.

To conclude, I would like to come back to the fact that in Turkey, as in other Mediterranean countries, unregistered work is widespread. It was frequently expressed in our conference that unregistered work is unfair to workers in informal jobs, to employers and workers in the formal economy and hence unfair to the society. Much work remains to be done to raise awareness and understanding of undeclared work, its risks for individuals and its hampering effects on economic and social development, about ways to break out of the informality trap. Working with the media, research work, dissemination of good practice is rightly mentioned in the conference report's conclusions. I end by reverting to the principle of national ownership and good practices from Turkey as reported on yesterday. It is indeed so important to provide information understandable to people in the street.

I would finally like to call upon all individuals and groups that have moral authority in Turkish society, including politicians, academics, teachers and imams to join and further inspire this coalition "Together Against Unregistered Work!"

Thanks.