Minister Müezzinoğlu: "A Transparent and Reliable Severance Pay Fund Will Be Implemented"

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The ordinary Assembly meeting of the Istanbul Chamber of Industry (ICI) was held on November 23, 2016 under the main theme "The Importance of Reforms in Business Life and Searches for New Models for Sustainable Growth and Our Economy and Industry" at Odakule Assembly Hall. The Assembly meeting, moderated by Hasan Büyükdede, ICI Vice President of Assembly, hosted Mehmet Müezzinoğlu, Minister of Labor and Social Security.

Mehmet Müezzinoğlu,
Minister of Labor and Social Security

Minister Müezzinoğlu addressed the ICI Assembly Members, stating that establishing commissions and seeking solutions in a cooperative way are necessary for resolving problems, especially in business life. He stated that they are ready to establish a working commission with ICI on this matter. Emphasizing that one of the most important reform items in this period will be related to severance pay, Minister Müezzinoglu said: "One of our main reforms will be a transparent and sustainable fund which protects the rights of our workers without missing a single day, collects their earnings in a pool that enables them to calculate their own pay to draw from it in the near future as they need it." Stating the need for an intermediary between the employee and the employer, Minister Müezzinoglu noted: "This way, we can ensure that any dispute between the parties is resolved before it reaches the courts."

ICI Chairman Erdal Bahçıvan reviewed the current issues involving the business world at the beginning of his speech about the current agenda. Stating his suggestions on severance pay and increasing the female participation in the workforce and a cultural characteristic of Turkey, Bahçıvan said: "Grandparents are naturally considered daycare nurses in our country. In this regard, providing financial support to the grandparents who look after their grandchildren, by means of a social assistance program would contribute to the solution"

Erdal Bahçıvan, ICI Chairman

Bahçıvan claimed that employment is gradually moving away from the industry, and added:

"While industry accounts for only 19% of employment, employees prefer to work in the service and public sectors. As the path to becoming a prosperous society lays in a production-oriented economy, we should drag down employment costs to competitive levels, pave the way for flexible working models, and take measures to attract industrial workers that will attain production with high added-value.

Hasan Büyükdede, Vice President of Assembly, delivered the opening speech at the Istanbul Chamber of Industry's ordinary assembly meeting in November. Büyükdede offered his condolences for the workers who lost their lives in the mine accident that recently took place in Siirt. Büyükdede then commented on the Assembly's main agenda item:

Hasan Büyükdede,
ICI Vice President of Assembly

Industrialists undertake a major role in the economic development by creating added-value while assuming an important task and responsibility in reducing unemployment and increasing the quality of the labor force via direct and indirect employment. Our private sector, our industrialists suffer from a number of serious problems due to the irregularities in the legal system in relation to employer-employee relations, insufficient education, arbitrary practices of labor inspectors, insufficiencies in the occupational health and safety legislation, unlawful strikes, new demands in relation to the obligation of female employment and wage structures that are uncompetitive with some countries that have the same production level as our country. We believe that the needs of our business world will be met by a solution to be created by cooperation of industrialists, the ministry and the bureaucracy, as in the case of today's meeting. "

Büyükdede, ICI Vice President of Assembly, then invited ICI Chairman Erdal Bahçıvan to take the floor with his speech on the main agenda of the Assembly. Bahçıvan commenced his speech with references to the recent developments in the world. Highlighting their need to thoroughly analyze the rising wave of populism in Europe and the US and its reasons, Bahçıvan stated that many people in these countries, which have moved away from the production economy in the process of globalization, suffer a downfall in their economic prosperity and quality of life.

Stressing that it is very risky to give power to political views that blamed immigrants and foreigners for the problems that are actually caused by a non-productive economy, Bahçıvan stressed that a world where prejudices rise, trade declines and economies withdraw would further complicate the existing problems.

Pointing out that mankind has been in search of a fairer world in the recent years, Bahçıvan expressed that the globalization process of the last quarter of the century, which was not constrained by any rules, had focused on the financial capital and moved societies away from production, real economy and real welfare. Bahçıvan said that unprecedented economic and social inequalities in in the human history emerged during this period and claimed that the reason behing this inequality, which has sparked a number of Nobel-winning studies so far, is not yet a matter of discussion among governments worldwide.

Bahçıvan stressed that income gaps have increased around the world in the aftermath of the global economic crisis of 2008, yet no concrete steps have been taken to tackle the problem other than the traditional methods and reminded that the problem of unemployment still remains unresolved even eight years after the crisis.

Bahçıvan: "The world is changing its skin. While out-of-the-box changes are taking place in all areas, ’extremism’ is expected to be the most prominent characteristic of the recent period. The rising wave against globalization brings serious uncertainties with itself in the political and economic fields. It becomes more and more difficult to predict the near future of many fields, such as global trade order, financial system, and international cooperation. Economy and business are also affected by this challenging uncertainty and process of change. We see that the concept of social state, having been eroded during the ruleless globalization of the last 30 years has once again become an agenda item in many countries. As such, we need reforms more than ever before that will satisfy all parties in the business life and serve the labor peace and social peace."

Stressing that adapting an attitude that is selfish and only values a certain point of view is out of date, Bahçıvan stated that it was replaced by a more inclusive approach that prioritized the well-being of a wider audience through increasing cooperation among all stakeholders, including employees, employers and labor unions.

Bahçıvan later remarked on the main agenda of Assembly. Bahçıvan said that legislation on severance pay should be revised as soon as possible, with participation of all relevant and competent social stakeholders. Indicating that the existing severance pay system is a structure that aggrieves both workers and employers, Bahçıvan noted that the rate of workers who can receive severance pay is below 15 percent. Bahçıvan insisted that amendments to the severance pay system should alleviate this problem for employees, and stated that the ideal solution would be to transfer the responsibility, which is currently placed on employers, to an independent fund.

Emphasizing that a system in which workers would entrust 20-25 years of their savings to employers represented a weak point in the economy, Bahçıvan stated the need for a system based on independent funds which is focused on savings and is more self-expanding, allowing for withdrawals at certain periods.

"We believe that today's employees suffer from the severance pay system in Turkey. Employers turning this into an item they can account for in their expenses would prevent further conflicts, at least in this regard. Once such system is established, this fund can be managed with today's PPS (private pension system) model approach. The new structure and fund that will be created with this understanding would also contribute to the solution for savings gap, which is Turkey's one of the most important economic problems."

Bahçıvan stated that employment is moving away from the industrial sector and, according to the recently announced TURKSTAT data, industry accounts for only 19% of employment with a tendency to decrease even further. He noted that the most important reasons for this decline are the fact that employees prefer to work in the services and the public sector rather than working in the industry.

Indicating that Turkey's development and the way to become a prosperous society is through production, Bahçıvan pointed out that the industrial sector should be made more attractive for employees. Bahçıvan stated that in this regard, employment costs should be dragged down to competitive levels, flexible business models and workforce market should be created and measures should be taken to make industry more appealing for workers in order to ensure production with higher added-value.

Referring to female participation in labor, Bahçıvan said that Turkey should use female workforce more actively. Reminding that Turkey is behind the OECD average in this respect, Bahçıvan stated that the government supported the steps on increasing female participation in workforce, yet such policies should not deter employers from employing women.

Drawing attention to a characteristic feature of Turkey, Bahçıvan said that while women are more involved in business life, it fell on grandparents to look after their grandchildren. He underlined that, in this regard, providing financial support to the grandparents looking after their grandchildren by means of a social assistance program would contribute to the solution of an important problem.

Bahçıvan concluded his speech as follows:

"Having stated that, I would also like to mention the issue of occupational health and safety, which is an integral part of our culture of social security. There is no doubt that giving priority to the safety and health of our employees should be the primary responsibility of the state and employers. In this respect, obligations to be placed on employers and employees, as well of increased effectiveness thereof, are critical. We believe that putting all the responsibility on employers in any conflict is an attitude that needs to be changed."

Erdal Bahçıvan, Mehmet Müezzinoğlu

Mehmet Müezzinoğlu, the Minister of Labour and Social Security was then invited to the stage to make his speech by Hasan Büyükdede who was the moderator of the Assembly meeting. Mentioning the political and economic processes in Turkey from the recent past to today, Müezzinoğlu reminded the process which saw exports rise from $36 billion to $158 billion. Müezzinoğlu said that Turkey has not given up on its targets despite the extraordinary negative developments in the recent period, and added: "What Turkey and this great nation deserve is to reach these ambitious targets". Mentioning about the fact that they will continue their efforts to create reforms in a sincere environment, Müezzinoğlu emphasized the importance of creating a qualified and skilled labor market, referring to the holistic growth model of ICI.

Müezzinoglu stated that Turkey has become a country that produces more and he cited entrepreneurship and education programs and business and vocational counseling as contributors to the business. Müezzinoğlu expressed that they would support industrialists by providing purchase guarantees, and increase the industry's competitiveness and R&D capacity in doing so.

He pointed out that the issue of employment is the government's main agenda item and that the unemployment rate is 11.3 percent and youth unemployment rate is even higher. He stated that they wanted to increase women’s employment and for this they need to achieve a robust growth.

Müezzinoğlu indicated that they can plan the second phase of the social security reform together with the industrialists, taking into account their suggestions and requests. Mentioning the legal problems between workers and employers, he emphasized that the powerful intermediary mechanism will take the weight off courts, leading to faster resolution. He pointed out that all employees should be able to defend their rights but it should not lead to injustice and opportunism. He stressed that the main role of the Ministry is to provide equal arbitration for all parties.

Müezzinoglu said that the most important problem in terms of occupational health and safety is that these issues can not be integrated into the culture, and that mutual responsibilities should be fulfilled. Emphasizing that workers should be more demanding, conscious and sensitive towards occupational health and safety, a matter he singled out as a cultural weak point of the society. Müezzinoglu stated that this weakness cannot be eliminated through penalties, but by increasing awareness through education and public service announcements.

He stressed that they do not turn a blind eye to the weight off the shoulders of the employers and they take most of the burden off their shoulders regarding the minimum wage issue, and that they would continue to take measures that would not deteriorate budget stability. Müezzinoglu informed that, with the electronic application system which is to be set up for recruitment of skilled foreign workers, the application period will be completed within 15 days. He also added that 2017 would be a better year than 2016, which saw many negative developments.

Müezzinoğlu commented on severance pay:

"The most important problem for employers and employees is the problem of severance pay. It is not clear who wins and who loses in this system. The ambiguity on this matter must be minimal for employers. Employees are the ones who suffer the most from the current severance pay system. The trade unions act a little selfish in the sense that they only consider the needs of the union members. According to a study conducted by the former Minister Süleyman Soylu, only 16% of workers can benefit from severance pay. "One of our main reforms will be a transparent and sustainable fund which protects the rights of our workers without missing a single day, collects their earnings in a pool that enables them to calculate their own pay to draw from it in the near future as they need it. It is very important that ICI Chairman Bahçıvan mentioned about this system that gives workers credit for their efforts."

Then, the members of the Assembly took the stage to express their opinions on the agenda items are related to business and share developments that they experienced themselves, followed by a series of questions for Minister Müezzinoglu.