Informal employment in Turkey

There are 8.5 million people working informally in our country. 10 percent of the total population works informally. Due to informal employment, the annual loss to the treasury is 1 trillion 81 billion TL. Due to informal employment, the monthly loss of the Social Security Institution (SGK) is 86.2 billion TL, and the annual loss is 732.7 billion TL. Due to informal employment, the monthly tax loss of the finance administration from withholding and stamp duty is 40.9 billion TL, and the annual loss is 347.9 billion TL. Informal employment rates have always been high in our country.

It is estimated that there are approximately 8.5 million people in our country who are employed informally without being registered with any social security institution. These workers, whom we can describe as modern-day slaves, are left behind because they have no job security for their own and their families' futures. Informal employment, which is one of the leading socio-economic problems, continues to maintain its importance in our country as it does in many others. Looking at the size of the informal economy in our country, according to the share of those working without being affiliated with any social security institution among total employees in the August 2020 period, it decreased by 3.2 points compared to the same period of the previous year and stood at 32.9%. The rate of informal workers in the non-agricultural sector decreased by 2.8 points compared to the same period of the previous year to 20.6%. The sector where informal employment is most common is the agricultural sector. According to TUIK, after agriculture, the sectors with the highest informal employment are construction and the hotel and restaurant services sector. The industrial sector is the area where informality is relatively the lowest.

According to 2023 TUIK labor statistics, the informal employment rate is 31%. According to 2024 data, the informal employment rate is 26.4%. It is observed that this rate is in sectors where informal employment is still high, primarily the agricultural sector. The informal employment rate and the size of the informal economy run almost parallel, and this rate is seen at around 30% in Turkey. While the informal employment rate was at the 52.14% level in 2002, it declined to the 32.9% level in 2020. Although Turkey has taken significant steps regarding the reduction of informal employment, the informal employment rate has not yet reached the level of the European Union and other developed countries.

It is observed that informal employment is significantly lower in Istanbul and Bursa compared to other provinces. Factors such as the development levels of the provinces and the share of industry in employment are effective in the differentiation of the informal employment rate on a provincial basis. The prevalence of informal and semi-official activities in small firms in Turkey parallels the sharp differences in productivity between different firm sizes. The productivity gap between small and medium-sized firms in the Turkish manufacturing sectors is among the largest among peer countries. There is significant potential for mergers that increase economies of scale and for cooperation opportunities between firms. Furthermore, the gap between small and medium-sized firms and their larger counterparts has increased over time.

Ventures called "young enterprises," established after the beginning of the 2000s and operating in medium-high and high-tech sectors, tend to have productivity levels similar to large firms, which suggests that Turkey has fertile ground to improve the overall technological intensity of its manufacturing sectors. The low average productivity of businesses stems from a combination of factors. The average level of productive capital per employee and the skill level, including owners and managers, lag behind other OECD countries despite strong investment growth and improvements in enrollment rates in secondary and higher education. On average, Turkish firms are less involved in export activities, and exporting firms mainly produce goods that are consumed as final goods elsewhere. Very small informal businesses employ 60% of all informal workers in the Turkish economy. The share of informal workers is much lower in larger and more institutionalized firms. The agricultural sector accounts for 80% of small informal businesses. Only about 20% of employees in manufacturing and other sectors are considered informal.