INTRODUCTION
Before 2006, the social security management was constructed as three different institutions. One was involving with the workers(SSK-Social Security Institution), one with the public servants(Emekli Sandıgı) and one with the self-employed workers(BAGKUR). In 2006, the system changed and all the three institutions have been transformed into one institution (SGK). The change has influenced how the social security services are supplied to the people. Before 2006, people could apply to the different health service places and other social security service places depending on their type. The most efficient one was the Emekli Sandıgı for the public servants. The health services and the other social services through the Emekli Sandıgı was better than the other ones. The SSK has been criticized by many people because of the long lines in the hospitals and even many politicians has made promises to solve this problem. However, for a long term till 2006, the workers have suffered from the SSK system.
The changes in 2006 was a result of the financial weaknesses in the social security institutions. The Emekli Sandıgı was financially more secure but the SSK and the BAGKUR have suffered from the financial weaknesses. The reason behind this was the early age of retirement. People in Turkey could retire at their 30s and they could receive their social benefits from the social security systems. The social security system in Turkey includes health services, retirement insurance and some other social security services. In another word, when a person gets retired, then he or she can live on the retirement benefits in a modest town. However, the early age of retirement has brought a large financial problem. The social insurance and the health insurance system were together and the early age of retirement has crashed the system. In 2006, the three different systems have been transformed into one and also the age of retirement has changed to 65. This situation is still considered as against the social state; however, the system needs to produce resources to fund the social security system. The payments collected from the people for an early age of retirement made the situation financially unsustainable.
In this paper, I will analyze some important facts by providing some statistics from Turkey. By using some demographic data from the Statistics Institution of Turkey, I will try to make a projection for the future.
THE SOCIAL SECURITY EXPENDITURES IN TURKEY
Following the collapse of the Ottoman Empire, a new republic was born in Anatolia called “the Republic of Turkey”. The new republic was claiming a construction of a social state. Ataturk, the founder of the republic, has expressed that every citizen would benefit from the social expenditures equally. In another word, Turkey has experienced a global health and retirement insurance. However, it was not that easy. At the beginning years of the republic, there were not many production facilities in Turkey; thus, it was not possible to spend more than the income (or production). Turkey could develop its industry after 1950s. Also until 1990s, the number of the production facilities was limited. Between 1990s and 2000s, the Turkish Economy could grow much faster relatively. Having a social state without enough production capacity behind it has always been a great risk for Turkey. Analyzing the social security institutions’ incomes and expenditures indicates us that only after 2000, Turkey could start giving a well-designed social services to the citizens. The graph 1 indicates us that the expenditures have been more than the income of the institutions for all years. Also we observe that the social security expenditures are increasing in time. The increase in income and the expenditures are parallel and every year the social security system is creating a deficit. Therefore, the change in the policy of retirement is more understandable.
Graph 1: Social Security Institutions Income and Expenditures (000 TL)
A system producing deficit every other year would not be able to be sustainable. Thus, the government has extended the required time for the retirement to the age of 65 for everybody. The table 1 basically shows us how the expenditures are distributed among varying social expenditures.
Table1: Distribution of Expenditures on Social Protection by Type of Benefits (000 000 TL)
As can be seen in the table 1, the social security system includes varying items in it from health services to unemployment insurance payments. Turkey has a social state approach and many social supports are created. However, the problem is the financial sustainability of the services. Almost 1.5% of the budget deficit was a result of the social security system deficit in Turkey.
In Turkey, the state, person, and the employer make the social security payments together. The workers are protected by the government and they pay a little share in the social security payments and they receive all the benefits from the social security system. The transformation of the Turkish Social Security system has two main reasons: 1) the financial unsustainibility as mentioned above and 2) the European Union member process. The European Union requests some adjustments from Turkey as a condition to join the Union. Especially in 2000s, the new government in Turkey has started implementing the policy to join the European Union. The European Union has requested from Turkey to provide equal opportunity for all the citizens in Turkey to the public services including the health and retirement services. Turkey was mainly an agricultural country from the beginning of the foundation of Turkey in 1923 to 1980s. The share of the agricultural production in the total employment is still over 30%. The workers in the agricultural production were mostly family member workers and they did not have insurance paid for them. Also the housewives did not have any insurance. Therefore, there has been a social inequality to access to the public services. The last reform in the health services and the social security system has brought an insurance coverage for everybody. If a person cannot afford to pay the social security payments, then the state provides the social security for this person. However, there still exist some people without any insurance. Recently, the number of people not covered under insurance has radically gone down. But the global insurance coverage of every person has brought large social security payments. The government is spending effort to solve the problem of financial unsustainibility of the social security services.
Another important fact in terms of social security expenditures is the immigrants in the country. The crisis in the Middle Eastern countries is influencing the social security expenditures in Turkey. A large number of Syrians has come to Turkey because of the local conflict in Syria. The government is spending for providing immigrant camps in Turkey. Turkey receives a little from the international organizations and the developed countries to cover the expenses of the immigrants. Thus, the expenditures on the immigrants is increasing the deficit in the social security services.
SOCIAL SECURITY PAYMENT SYSTEM IN TURKEY
Social security payments changes depending on the industry. The industries with higher risk of work accidents or heavy works have a higher load on the government and the employers while the office works have a payment of social security on the workers. The table 3 indicates us the share of the social security payment among the employer and employess. As can be seen in the total part, in average, the 36.5% of the all social security payments are made by the employers and the employees. The rest is paid by the state. As can be seen from the table, the government pays most of the social security expenditures.
*The rates change according to the risk categories of jobs. Depending on the risk category, the employer's share varies between 1% and 6.5%.
The workers pay only 15% of all the social security. Depending on the industry, the ratio that the government pays might go up to 43% of all. Also the employees, the employers and the government are required to pay an unemployment fee at the rates of 1%, 2% and 1%, respectively, of the gross salary of the employee. Similar to the social security premium payments, unemployment insurance premiums are required to be paid on a monthly basis. Employers can deduct such contributions from their taxable income. The employees can deduct a certain amount from their tax duties.
Consequently, the social security payments are shared among the employers, the employees and the government. The government makes the largest contribution. Also unemployment payments are funded by the same group.
THE DEPENDENCY RATIO IN TURKEY
The population of Turkey is almost reaching 85 million. In average, the Turkish population is increasing at around 12% every year. Also observing the population change in Turkey, we see that the population is getting older. Especially after 1980s, Turkey has started implementing the policy of industrialization and many people migrated to the city centers from the rural areas. This situation has changed the population dynamics and people have started preferring to have one or two children. The people in the rural areas are still having a large of children. Thus, the industrialization in Turkey and the migration from the rural areas to the cities near the industrial zones have changed the demography of the Turkish population.
Graph 2: Turkish Population in Time
The Turkish population is expected to increase until 2022. The increasing trend in the population will increase some demographic variables in Turkey. One of the most eminent variables is the dependency ration in Turkey. The dependency ratio influences the social security system deeply.
Graph 3: Dependency Ration in Turkey
In the past, Turkey has had a large young population. As can be seen in the graph 3, the young population rate was high. However, it has started decreasing after 2000 and it is expected to observe this decrease in the long term. In another word, the young population is decreasing in Turkey. On the other side, the Turkish population is getting older and it is expected to observe this increase in the long run. Consequently, we can expect that the burden on the social security system will increase in the long. The prime minister of Turkey mentioned that for a long growth every family needs to have at least three children. Although it seems to be ironic to many people in the country, the aging population needs to refresh to keep up with the economic issues.
INCOME INEQUALITY AMONG ELDERLY
The elderly population in Turkey has faced an income inequality problem in the past. Many data served by the international organizations indicates us that Turkey has had one of largest income inequality before 2000s.
There is no data generated on the income inequality for different age groups as well as for the elderly people. The table 4 indicates us that the population in Turkey faces an income inequality problem. As known, when the Gini coefficient gets closer to zero, then the income inequality disappears. In Turkey, the Gini coefficient is higher than 0,40. Then we can observe that there exists an income inequality. Before 2006, the income inequality was worse in Turkey. The industrialization has increased the incomes and the wages and it is better than the past. Consequently, the elderly people in Turkey have faced a harsh income inequality and this income inequality is expected to reflect to the future.
UNEMPLOYMENT INSURANCE
In Turkey, the employer, the employee and the government contributes to the unemployment insurance at the rates of 2%, 1% and 1%. Legally employed workers are eligible for the unemployment insurance benefits in Turkey. These includes the foreigners over 18 years old if they work legally in Turkey. A worker can receive the 600 days contribution in his preceding 3 years work. The worker can receive the 50% of his average wage of his last four months preceding work and there exist a limit of minimum wage of the sector. A worker can receive the unemployment insurance payment up to 1080 days depending on his contribution to the unemployment insurance system.
NATIONWIDE HEALTH CARE COVERAGE IN TURKEY
Turkey has reformed the social security system as well as the health care system. In Turkey, almost everybody has to be covered with a health insurance scheme. Workers, managers, tradesmen and other people who can create an income have to contribute to the social security system whereas the people who do not have a regular income are covered by some other social security programs. The table 5 shows how different workers, managers and tradesmen contribute to the social security system and whether their families are covered or not. Even the table shows that some people might not be covered under a health insurance program, the people who cannot afford a health insurance plan are covered under a social program.
In Turkey, there are private and public hospitals and health care service suppliers. The government makes an agreement with the private hospitals and health care service suppliers. Therefore, a citizen can receive health care service from both private and public hospitals. However, if a citizen would like to go to a private hospital, he needs to pay some extra costs.
In case of emergency, without checking if the person in need of emergent care, the hospitals have to serve the person. If the person is not cared, that creates trouble for the health care service suppliers.
As can be seen in the table 5, theoretically everybody is included under an health insurance in a way. The insurance premium is shared among the employers, the employees and the state.
PROBLEMS AND ISSUES
Turkey has made an important reform in the social security and the health care services in 2006. Nowadays, the system looks better than the past. For instance, before 2006, a worker had to wait long hours to get an appointment from a public hospital because the number of hospitals a person could receive health care were limited. After the reform, a worker has more options. Also the hospitals and the health care service suppliers in public and private sector have started using more technology. Thus, people can gather information on health care issues and use the services more efficiently.
Although the Turkish Social Security System Reform has improved the services and how the services are supplied to the citizens, Turkey still faces some issues. Firstly, many workers are hired illegally without any insurance. Even though there is no official information exists on this issue, it can be easily observed in the factories. Secondly, many factories and even the governmental organizations use sub-contractors to provide some services and the legislations for hiring people through sub-contractors creating some disadvantages for the workers. For instance, the recent mining accident in Soma has showed us that the sub-contracting system is making the workers disadvantages. Thirdly, the private hospitals and the private health service providers charge some costs to the customers as against legal regulations without giving any bill. Thus, a private company is being able to gather more money from people without paying any tax on it.
Consequently, analyzing the Turkish National Social Security System exhibits us that it needs to be improved. The population of Turkey is increasing and many people live in the big cities. The population of rural areas is decreasing every year. Eventually, the population density is very high in some regions while the others are transformed into low population-dense places. Therefore, Turkey needs to be able to set the best social security system to match the needs of people.
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