The income gap vis-à-vis the upper half of OECD countries was narrowing with a growth deceleration in the last two years. Rising labour force participation and job creation have compensated for declining contributions of capital deepening and labour productivity.
Income inequality remains very high, reflecting important gaps in the education, skills and earning capacity of individuals, in the productivity of the firms employing them, and limited redistribution from the tax‑and‑transfer system. Greenhouse gas emissions per capita are below the OECD average but continue rising and the population’s exposure to particulate matter in the air is one of the highest in OECD.
Progress has been limited on 2017 priorities, as the reforms intended in the successive government action plans were not implemented amid a constitutional referendum in 2017 and early presidential and parliamentary elections in 2018. New legislation was adopted in early 2018 facilitating market entry and infrastructure access by start-ups, as a first step in a broad programme to improve Turkey’s business environment.
Key education, labour and product market reforms are necessary to converge with good OECD policy practices. Upskilling the labour force and easing the shift of low-skilled workers from low-productivity informal to high-productivity formal firms would significantly boost average labour productivity, human capital formation and social inclusion. Environmental protection should be integrated into economic plans by committing the necessary financial and human resources.
