Growing Turkish ire due to job and wage cuts

A man held a gun to his head and another to his chest outside the Turkish prime minister’s office on Monday in a dramatic protest over economic hardship.

It is not the first time Turks hit by economic crisis have turned to melodramatic means to bring their financial troubles to the government’s attention. But with violent protests breaking out in other recession-hit countries, Monday’s incident is a worrying sign for prime minister Recep Tayyip Erdogan as he tries to convince voters that Turkey can escape the worst effects of the global downturn.

So far, although trade unions have organised rallies to demonstrate against policies, the economic crisis has not sparked protests in Turkey on the scale of those seen in Greece, Russia or even the UK.

But tales of personal distress in Turkey – the gunman was a retired policeman protesting at his inability to pay off debts – are multiplying as the worldwide manufacturing slump forces Turkish companies to lay off workers or cut wages during halts in production.

The latest data showed unemployment above 12 per cent at the end of 2008, the highest in five years, and economists say these figures may understate the reality due to the scale of the unregistered economy. Banks are reporting rising numbers of small businesses and credit card borrowers unable to pay debts.

Economists worry the prime minister’s drive to win votes in next month’s local elections is undermining fiscal policy, noting that January’s cash budget deficit was almost six times bigger than a year earlier.

The government has announced a limited stimulus package that gives employers bigger subsidies to keep workers they would otherwise lay off, and includes tax breaks aimed at boosting car sales and encouraging investment in the poorer south-east. Further measures under consideration are rumoured to include direct payments to people on low incomes.

“We think the pace of easing in both monetary and fiscal policies is too rapid, and ignores a host of ... weaknesses that set Turkey apart from advanced economies,” said analysts at the consultancy Istanbul Analytics.

Mr Erdogan insists Turkey is a “safe haven” in comparison with some neighbours in eastern Europe and can afford to hold out in negotiations with the International Monetary Fund for a deal that does not impose unpopular conditions.