Unregistered employment in Turkey
| Author | Hakki Mümin Ay |
| Position | Assistant Professor Karamanoilu Mehmetbey University Faculty of Economics and Administrative Sciences/ Economics Karaman, Turkey, 7100 |
| Pages | 366-377 |
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Economic life in our present-day world has a multi-functional and complex constitution. The number of the goods and services has increased, the technologies used have developed, employment facilities have changed and diversified, the developments abroad and inland have changed economic actors and positions. Such quick and multi-dimensional changes and developments may not allow the government to control and regulate what happens in economic life.
The rules which are set up by the government to arrange economic and social lives cause the ones wishing to earn more money to get closer to informal economy. Although the individuals and institutions which are active in informal economy carry some risks, they will both earn more money and get rid of some kinds of bureaucracy. However, these activities include disadvantages for the government and other individuals and institutions. The government is deprived of taxes and other official revenues which are unregistered. Other individuals and institutions are affected negatively due to unfair competition.
Unregistered employment and informal economy are the concepts which are bound to each other. The ones who produce informal goods and services and who do not notify this to the local government usually employ unregistered workers. The most important problem emerged with the reflection of informal economy over working life is the unregistered employment which emerged as employing unregistered and undeclared illegal worker or working unregistered in his self name and account by violating the rules and regulations
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which make it mandatory to obey social security system and the law rules regulating the working life. While unregistered employment is in the form of not notifying the labours of the workers to public establishments; it may also be in the form of incomplete notification of labours as day and payment.
Informal economy is closely related with the development levels of the states. From developed countries to underdeveloped ones, proportion of informal economy in national economies represents accrual.
Actually, proportions of informal economy and therefore unregistered employment in underdeveloped and developing countries are quite high. Unregistered employment in Turkey as a developing country makes up half of the employment in parallel with informal economy.
In the study, concepts of unregistered employment and informal economy will be explained and the tight relation between them will be dealt with. Afterwards, the reasons of unregistered employment and its economic and social results will be given place. In the last part, dimensions of unregistered employment in Turkey and in the world will be compared and works and solution proposals devoted to curb unregistered employment will be mentioned.
If it is to make a general definition, informal economy is the whole of economic activities that cannot be estimated according to known statistical methods used to calculate gross national earnings and revenue bringing. (Derdiyok, 1993: 54).
The concepts such as underground economy, informal economy, hidden economy, secret economy, second economy, black economy, illegal economy, untied economy, irregular economy, parallel economy, unreceipted economy, invisible economy, marginal economy, shadow economy, loss economy, tax-exempt economy¸ are used instead of informal economy. Informal economy- from the point of taxation- is the whole of activities which are left out of knowledge field of tax administration with the incentive of tax-evasion and avoiding from taxation. (Altui, 1994:15).
Unregistered employment is generally keeping the workers away from awareness of the government, employing unskilled workers, violating the regulations such as minimum age level (child labour), minimum wage, overtime, workplace standards, health and security of workers.
According to this definition unregistered employment: means the ones who are not enrolled in any social security institution for the work s/he makes in the reference week. According to another definition, it is non-declaration of the workers to related public institutions and organizations or avoiding from legal responsibilities such as tax and social security bonuses etc. due to incomplete declaration (MLSS, 2004a:27). Then -as understood from the definition- the most important aspect of unregistered employment is reduction of public revenues.
In a country where there is no informal economy, it cannot be mentioned about unregistered employment. There is a close relationship between unregistered employment and informal economy. The ones producing goods and services unregistered also employ unregistered workers. So, in the countries where informal economy is high, the unregistered employment is high, too. In the rising market economies, it takes the attention that economy and employment have shifted to unregistered and informal ones in increasing intensity since 1970s. But, informal economy, when both Turkey's economy and other countries' experience
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are observed, is in a very complicated and multi-dimensional structure with its reasons, results, and operation. While expansion of informal economy causes the workers to become unsecured on one hand, and it causes on the other hand unfair competition against formal economy. Most importantly, it causes public shortfalls to get bigger and the social security system to break down by giving way to reduction of finance resources hoped to supplied by taxation revenues (Us, 2004;1).
The main reasons of unregistered employment are these (MLSS, 2004b, 4); -Excessiveness of responsibilities and formalities about employment: The most two important reasons of increasing volume of informal economy are tax load and taxation regulations of the public. There is a positive relation between them. As the tax levels and legal regulations increase, the cost of informal economy increases, too (Han et.al.., 2006:237).
In addition to tax and other loads that the government takes from over the workers, excessiveness of the formalities as a result of employment's declaration makes informal economy tempting. The cutbacks from the salary such as insurance bonus and tax constitute a big load for the employer.
The major element which determines presence of market economy is competition. Informal economy which impairs competition conditions has aggravated the crisis which is experienced currently. The employer who at last notifies his insured worker to the institution falls back in the competition while fulfilling heavy fiscal responsibilities. The employer whose profit decreases is shifted to informal economy after some time as he will be disadvantaged in comparison to the one who makes production via illegal worker.
- Unfair distribution of the income, poverty and unemployment: Added value that the poor and low-educated workers produce in the production is low, too. As a result, the bonus and tax paid for these people may surpass the added value which these people produce.
- Lack of efficient inspection: Especially public institutions in underdeveloped countries are not efficient. Lack of inspection mechanism and non-deterrent fines make unregistered employment tempting.
- Unattractive social security services: Social security services interest individual's future closely. Social security services which minimize the concerns and possibilities about the future are seen as a serious deficiency in developed societies.
- Highness of unemployment rate and lowness of added value of the employment and uneducated labour power: In the studies carried out, it's been found out that education levels of the people working unregistered are low. As the chance of work choice for uneducated people is low, they find works unregistered.
- Lack of coordination and corporation between public establishments: In coping with unregistered...
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