Employment Incentives in Turkey: Boost Your Business in 2024
Turkey has emerged as a dynamic economic hub, offering substantial opportunities for businesses and employees alike. As part of its broader economic policy, the Turkish government has established a wide array of employment incentives designed to stimulate job creation, reduce unemployment, and promote investments in various industries. This guide provides an overview of the employment incentives in Turkey, explaining their structure, benefits, and the specific sectors they target.
Overview of Employment Incentives in Turkey
To promote a competitive job market and economic growth, Turkey has implemented various employment incentives targeting both local and foreign businesses. These incentives aim to enhance job creation, especially in strategic sectors such as technology, manufacturing, tourism, and renewable energy. Employment incentives are essential for economic stability and are part of Turkey's wider initiative to attract foreign direct investment (FDI).
Employment Incentives in Turkey
Key Objectives of Turkish Employment Incentives
The primary goals of Turkey's employment incentives are to:
- Reduce Unemployment: Address high unemployment rates, particularly among youth and women.
- Encourage Investment: Support both local and international businesses to set up operations in Turkey.
- Promote Regional Development: Focus on economically underdeveloped regions to foster balanced economic growth across the country.
- Boost Workforce Skills: Facilitate training and upskilling of the Turkish workforce to meet industry demands.
Types of Employment Incentives
Turkey's employment incentives cover a broad spectrum, and each category has specific benefits for employers who meet the criteria. Key incentive categories include tax incentives, social security premium incentives, regional incentives, and vocational training programs.
a) Social Security Premium Incentives
Social security premium incentives reduce the employer's financial burden by covering part of their social security contributions. Key types include:
- General Social Security Premium Incentive: Applies to employers who meet specific hiring requirements, providing monthly support on social security premiums.
- Minimum Wage Support :"Minimum Wage Support" is a fixed amount of support provided to employers of workers earning minimum wage in Turkey in order to ease their financial burden. This support aims to help reduce the costs caused by the minimum wage, especially on small and medium-sized businesses.
- The Debt-Free Incentive: It offers a 5% monthly discount on social security employer contributions to employers with no outstanding premium debts.
- Overseas Incentive: Provides employers with a 5% monthly discount on social security employer contributions that they must pay for employees they employ in projects outside Turkey, in order to support companies doing business abroad and increase their competitiveness.
- OHS Incentive: Employers operating in high-risk sectors (such as construction, mining, and oil exploration) with more than 10 employees, who have maintained a record free of fatal or permanently disabling workplace accidents for the past three years, are eligible for a 50% reduction in unemployment insurance contributions for a period of three years.
- Women and Youth Employment Incentive: Special incentives are available for companies hiring women, young people, and disabled workers, reducing premium costs.
- Long-term Unemployed Employment Incentive: Employers hiring individuals unemployed for a long period receive subsidies on social security premiums for a specified period.
b) Regional Incentives
Regional incentives aim to balance economic development across Turkey by providing additional benefits to businesses in less-developed regions:
- Enhanced Incentive Rates: Companies operating in specific regions receive enhanced rates on tax reductions, social security premiums, and interest support.
- Strategic Investment Incentives: Businesses investing in sectors crucial to regional economies, such as manufacturing or agriculture, gain additional advantages.
c) Vocational Training and Development Programs
Vocational training programs are critical for developing a skilled workforce. The Turkish government partners with industry leaders to offer programs that improve employee skills and increase productivity:
- On-the-job Training Programs: Companies benefit from subsidized training programs for employees, encouraging skill development.
- Apprenticeship Incentives: Employers who take on apprentices are eligible for financial support from the government to cover training and wage costs.
Eligibility Criteria for Social Security Incentives in Turkey
Each incentive program has unique eligibility requirements, but some general criteria include:
- Sector Requirements: Certain incentives are sector-specific, aimed at industries like technology, manufacturing, or agriculture.
- Regional Criteria: Regional incentives are only available to companies based in designated development regions.
- Employment Conditions: Incentives for women, youth, and disabled individuals require specific hiring practices that prioritize these groups.
How to Apply for Employment Incentives in Turkey
Applications for employment incentives can be submitted through the Turkish Employment Agency (İŞKUR) or the Social Security Institution (SGK). Steps typically include:
- Registering with İŞKUR and SGK.
- Submitting necessary employment documents, including contracts and employee information.
- Verifying eligibility with relevant authorities.
Benefits of Employment Incentives for Employers & Employees
For employers, these incentives mean lower employment costs, reduced social security countrubutions , and increased access to a skilled workforce. For employees, the incentives create job opportunities, provide vocational training, and offer job stability, especially for disadvantaged groups.
Key Industries and Sectors Benefiting from Employment Incentives
Several industries benefit significantly from Turkey's employment incentives:
- Manufacturing: Manufacturing companies enjoy substantial tax reductions and social security incentives, particularly in less-developed regions.
- Technology and Innovation: Start-ups and tech companies are eligible for tax benefits and skill development programs.
- Tourism: Incentives support the tourism industry, focusing on regions with high potential for tourism development.
- Agriculture and Renewable Energy: Agricultural and green energy sectors receive special tax reductions and social security benefits, encouraging sustainable development.
- Niche Markets: Specialized sectors like sustainable products, organic foods, and customized fashion are growing in popularity.
- Cross-border Trade: Turkish consumers have a high demand for international products, particularly luxury and beauty brands, offering a great opportunity for cross-border e-commerce businesses.
- Rising Digital Payment Solutions: Turkey's adoption of digital payments and fintech solutions creates opportunities to offer flexible payment options like BNPL and mobile payments.
- Government Incentives: Incentives for technology investments and exports in sectors like IT, R&D, and digital innovation support e-commerce growth.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
