Posted by: Dirk | May 5, 2008

Stiglitz: The IMF and workers in Turkey

Since a financial crisis from 2001 Turkey is dependent on a loan from the IMF. The next tranche (US-$ 3.6 bn) is due in May. However, Hürriyet reports, the IMF insists on changes in the social security system:

The long-delayed social security reform aims to cut Turkey’s huge deficit and one of the conditions for the release of a 1.3 billion dollars IMF loan tranche.

According to the newly adopted law, the retirement age will be raised to 65 for both women and men in 2048. The retirement age was previously 58 for women and 60 for men. The law raises the number of days they have to work in order to retire from 7,000 to 7,200 as well.

The law also provides that the updating coefficient used while calculating the retirement pensions will be determined according to the Consumer Price Index (CPI) and Gross Domestic Product (GDP) figures announced in December every year.

This seems to be a typical case of bitter medicine from the IMF. (I am not an expert of Turkish politics though.) Apparently, workers did not agree with these policies and planned to demonstrate on May 1st, 2008, at Istanbul’s historically loaded Taksim square. Hürriyet, which is one of the biggest Turkish newspapers (the name means freedom), describes the outcome:

Turkish police on Thursday used batons and pepper spray, as well as water cannons to prevent crowds gathered to celebrate May Day in Istanbul from marching to Taksim Square where they planned to hold a mass gathering. Thirty-eight people, including eight policemen and one journalist, were injured and 530 demonstrations had been detained at the Istanbul rally on May 1.

Celebi criticized the security forces’ disproportional use of force, asking if it is proportional to fire water cannons and pepper spray against workers gathered in front of union buildings for no apparent reason.

This reminds me of Joe Stiglitz and his criticism of the IMF. In his keynote address at the Industrial Relations Research Association in January 2000, titled Democratic Development as the Fruits of Labor, he critisized the lack of workers involvement:

It was finance ministers and central bank governors—and outsiders who often seemed to be representing international financial interests—that had the seats at the table, not labor unions or labor ministers. Indeed, even as debate on reforming the international economic architecture proceeded, these people, who would inevitably face much of the costs of the mistaken policy, were not even invited to sit in on the discussions; and I often felt myself to be the lone voice in these discussions suggesting that basic democratic principles recommended that not only should their voice be heard, but they should actually have a seat at the table. To be sure, increasing attention did get focused on safety nets, but: was it simply an attempt to assuage feelings of guilt, providing too little, too late, or even worse, an attempt to moderate public criticism of “globalization without a human face?” The suspicion of the international institutions evidenced in Seattle was perhaps the not unsurprising outcome of the attitudes and policies of recent decades.

The criticism is not new – the keynote address is 8 years old – but apparently not much has changed. Maybe the news is that the news are not reported. At least the BBC does not mention the negotiations with the IMF in their story, and neither does the Spiegel’s story in Germany. The focus there is on the Taksim square, which was the location of the blood bath of the 70s. The unions wanted to remember it by gathering on the site. The reason why they would want to do that seems to be the social security reforms needed to get the IMF tranche, if I interpret the information above rightly.


  1. I don’t think workers and unions have the power they used to have. Globalization and AKP government put a big dent in their power.


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