POLICIES FOR HUMAN CAPITAL DEVELOPMENT IN TURKEY

A Torino Process ETF assessment

Turkey
Type
TRP assessment report
Authors
Helmut Zelloth, ETF expert
Year
2020
Full report

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Executive summary

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1. INTRODUCTION

1.1 About this assessment

The present government of Turkey has set ambitious plans to move from a middle-income to a high-income country and to enter the top-10 global economies. Policymakers are well aware that this can be only achieved if education and employment policies are able to transform and improve the country's human capital.

Seen in this context, the ETF assessment comes into play at an important point, as in 2019 the 'Turkey Education Vision 2023' was launched, which sets out the new priorities in human capital development for the next five years. This coincides with preparations for the next generation of the EU Instrument for Pre-Accession Assistance (IPA) in 2021–2027. The assessment is expected to help with the prioritisation of reforms and the design of actions by providing input for policymakers in the domain of education and training. The assessment findings complement the monitoring of the Economic Reform Programme (ERP) from a sector point of view.

The assessment process included an extensive phase of desk research based on responses to a standardised questionnaire (the NRF), analysis of other relevant studies, and the preparation of an issues paper containing an overview of themes to be discussed in the present report, which were then finalised in consultation with the ETF country and thematic teams responsible for Turkey.

As with other ETF assessments, this paper is not meant to be exhaustive. The national report for Turkey covers a broad selection of problems around human capital development and use, while the focus here is on the challenges that the ETF recommends addressing as a matter of priority.

1.2 Country overview

Global player facing national and international challenges

With more than 80 million inhabitants (projected to reach over 100 million by 2040), Turkey is one of the largest ETF partner countries and in recent years has become a significant global economic and political player. Over the last three decades it has undergone a major economic transformation to become a G-20 country (boasting the eighteenth largest economy in the world), and despite a recent economic slowdown, in 2018 the growth rate of the economy (2.6%) remained higher than in the EU (1.9%). The EU has maintained its position as, by far, Turkey's number one trading partner. Turkey is the EU's fifth largest export market and sixth largest provider of imported goods (Eurostat, 2019). In the period 2002–2018 more than 70% of foreign direct investment into Turkey came from the EU (Daily Sabah, 2018b).

Despite its growing economic and political importance, Turkey is facing a number of serious challenges. Lately, Turkey's economy has been battling with double-digit inflation and a falling currency. Recent years have also seen a drop in public finances (CoEU, 2019a) and spending pressures are emerging which may impact on investment for human capital development. The latest Economic and Financial Dialogue between the EU and Turkey (May 2019) concluded that the current economic headwinds are likely to be long-lasting. Concerns have also deepened regarding the independence of key economic institutions and the functioning of the country's market economy (EC, 2019a). However, higher GDP growth (3.9%) is projected for 2020 and a rebalancing of the economy is underway, albeit with large risks attached, according to the Spring 2019 Economic Forecast for Turkey (EC, 2019c).

Although Turkey has risen in the World Bank's Doing Business ranking by 26 places (World Bank, 2019c) since the last assessment, and now ranks 43 out of 190 economies for ease of doing business, the Small Business Act (SBA) assessment concluded that the business environment deteriorated slightly between 2016 and the end of 2018 (OECD, 2019a).

A long-lasting and challenging EU accession process

Turkey has been linked to the EU for more than 50 years (see, notably, the Association Agreement in 1964 and the Customs Union 1995) and remains a key partner of the EU. The 'waitinghood' for EC accession has lasted for some 20 years, with Turkey achieving candidate country status in 1999, and accession negotiations began in 2005. Since then, 16 chapters have been opened and only one has been provisionally closed. However, in 2018 negotiations came to a standstill – no further chapters are under consideration for opening or closing and no further work towards the modernisation of the customs union is currently foreseen (EC, 2019a). The latest EC background report acknowledged that Turkey has continued to align itself with the EU acquis, albeit at a limited pace. High-level political dialogue between Turkey and the EU continues (on foreign and security policy, energy, the economy and trade), although the pace of movement towards implementing jointly agreed actions is slow.

The EU's most serious concerns with regard to Turkey revolve around continued negative developments in relation to the rule of law, fundamental rights and the judiciary.

On the other hand, Turkey is well advanced in a number of areas, such as company law, trans-European networks, science and research. The country has also continuously shown a strong commitment to EU policies in the field of education and training, for example through participation in the ET2020 Working Groups, in the implementation and monitoring of the EU priorities for VET 2015–2020 (Riga Council Conclusions), in its commitment and pledges to the European Alliance for Apprenticeships (EAfA), via various IPA projects (i.e. building the qualifications framework), and through EU-Turkey cooperation in supporting refugees.

1.3 Strategic context

The latest national development plan aims to serve Turkey's goal of becoming one of the top-10 global economies. Covering a four-year period (2019–2023) five years ahead of its centennial, the Eleventh Development Plan[1] Turkey's economic policies are set through Development Plans and Medium-Term Programmes (MTPs). While Development Plans put forward a more holistic view of the social and economic priorities, the MTPs establish the specific actions and targets/indicators required.
sets out to attain a GDP of $2 trillion, a rise in per capita income to $25,000 and exports worth $500 billion, as well as lowering unemployment to 5% and permanently reducing inflation to single digits. The intent is, further, to expand industrial growth by concentrating on the development of human capital. The plan includes education and employment policies for the transformation and improvement of human capital (Presidency of the Republic of Turkey, 2019b; Daily Sabah, 2018b).

Already in the previous National Development Plan (2013–2018) the overarching goal of Turkey's strategy was to achieve high, stable, sustainable and inclusive economic growth by creating a competitive and business-friendly economic environment and improving international competitiveness. Human capital and labour market reform, macroeconomic stability, technology and innovation, as well as institutional quality were seen as the preconditions for attaining this goal and the pillars on which it stood. A competitive, export-oriented and private-sector-led production structure was promoted, while enhancing productivity in manufacturing, improving public infrastructure and increasing the labour market participation of women and young people have been among the key commitments, which have been realised to only a limited extent.

The new plan is accompanied by 'Turkey's Education Vision 2023', a sector-wide strategy for education which highlights high-quality provision 'to raise science-loving, skilled, and ethical individuals who take an interest in culture and are willing to use present and future skills for the well-being of humanity' (MoNE, 2019b). The government advocates an approach to education that unites democracy and the economy, sees education as an 'ecosystem' and seeks to design all subcomponents of the system simultaneously. The strategy includes infrastructure reforms, a focus on particular priority areas (such as educational function, teachers and administrators, the school environment and governance) and sets concrete three-year targets. Two of the 18 areas of intervention are dedicated to vocational and technical education and to lifelong learning, and include specific goals (see sections 3.1 and 3.2).