Unemployment amid the political storm

March 15 was a very interesting day, or at least it was for me. The Netherlands held general elections, and the Turkish Institute of Statistics (TÜİK) released its Bulletin of Unemployment. I think it proved to be a day of glory for the Dutch, and despair for Turks. The Islamophobic Geert Wilders was sidelined by Dutch voters, who have turned up at a record 85 percent. On the same day, we found out that unemployment reached a seven-year high in Turkey, while having declined to a seven-year low in the EU, revealed just a week ago. It is worthwhile to unpack these events a bit. 

Since 2010, Turkey created more jobs than those lost in the EU and the U.S. We were very proud of the resilience of the Turkish economy, despite the 2009 hiccup. Much of this was thanks to quantitative easing by the U.S. Federal Reserve, but we didn't talk too much about that. Now that we are seeing monetary contraction, things are turning around. Recently, the U.S. announced employment figures for February, revealing that 235,000 jobs were created in the country during the month. While TÜİK doesn't have data for February yet, we know that in December, Turkey lost 36,000 jobs. The year 2017 might see a seven-year low in U.S. unemployment rate, too, just like in the EU. 

The unemployment rate is just below 5 percent in the U.S. today, and around 8 percent in the EU on average, whereas it is around 12 percent in Turkey. That is not very far from its 2009 peak of 13.9 percent. Youth unemployment is especially persistent, being more than 20 percent now while similar to 2009. Why is this happening in Turkey while things are getting better in the West? 

First, we have reached the limits of Turkey's structural change. Two thirds of long-run average growth in the Turkish...