Turkey\'s IMF deal unleashes angry union reaction

Published December 11th, 2000 - 02:00 GMT

Turkey unleashed an angry reaction from unions Thursday after agreeing to speed up economic reforms in return for a $10 billion IMF rescue package. The government promised to strengthen its reforms, especially in the overcrowded bank sector, as part of the emergency International Monetary Fund package announced Wednesday. 


Ankara also agreed to speed up privatization, a long-delayed condition of a four-billion-dollar, three-year stand-by program already agreed with the IMF to fund its budget deficit. But it ran straight into opposition from the unions. 


"The newly announced measures will not serve to improve the economy or bring welfare to Turkey," said Huseyin Tanriverdi, the deputy chairman of the Hak-Is confederation. "They will only add to the negative aspects of the stand-by deal," he told AFP by telephone. 


Turkish Prime Minister Bulent Ecevit announced the IMF deal, which included $7.5 billion in emergency funds and $2.9 under an existing stand-by deal with the IMF. Turkey is in desperate need for the IMF funds to fix its banks and compensate its foreign currency reserves, heavily depleted after the central bank injected money into the financial system to meet heavy cash demands. 


The central bank said Thursday its hard currency reserves stood at $18.9 billion on December 1, compared to $21.5 billion on November $24 and $24.4 billion on November 17. The difference amounted to a loss of $5.5 billion dollars in two weeks. 


But Turkey's unionists were already opposed to the existing stand-by agreement with the IMF, agreed last December, which principally aims to cut back chronic inflation. Under that agreement, Ankara said it would protect workers and civil servants against inflation, but also pledged to keep pay increases and the minimum wage in line with inflation targets. 


The government's plan for a civil servants' pay rise of 10 percent for the first six months of 2001 triggered demonstrations and a nationwide strike on December 1 despite interior ministry warnings that it was illegal. 


A senior official from the KESK public laborers confederation, Zengin Uzuner, said the proposed pay rise would fail to improve the financial situation of public employees. "According to our calculations, a public employee gets an average monthly income of some 201 million lira ($295), but a family of four needs at least 560 million ($822) a month for decent living," Uzuner said. "If the government fails to understand our previous demonstrations and does not make any change, we will step up our protests," he told AFP


Unionists say the difficulties are aggravated by the fact that Ankara will fail to meet its year-end target of a 25 percent rise in consumer prices and a 20 percent climb in wholesale prices. Inflation stood at 43.8 percent in consumer prices and 39.1 percent in wholesale prices in November, compared to 68.8 percent in consumer prices and 62.9 percent in wholesale prices in December last year. 


According to Tanriverdi of the Hak-Is confederation, the decrease in inflation does not mean a lot for public sector employees because "they do not see any money coming into their pockets". The government, which gave a pay rise of 10 percent for the first half of 2000 and 15 percent for the second half, says it will not let its employees suffer and will make extra funds available if inflation in the second half of next year falls above target. 


A second danger for workers, trade unions argued, was Ankara's plans to accelerate privatization in a bid to cut down on expensive internal borrowing. "Privatization has always brought about unemployment because governments never take into account the human factor. Since our economy does not depend on production, the employment force never gets bigger, it just gets smaller," Tanriverdi said. 


On Wednesday the government said that it would announce tenders by December 14 for the sale of 51 percent of Turkish Airlines (THY) and the 33.5 percent of Turkish Telekom, in line with pledges it made to the IMF. 


The secretary-general of the aviation workers' trade union, Hava-Is, said its workers were against privatization because of fears of mass redundancies under the guise of reconstruction. "Of course, we do not know the tender terms yet, but we have made preparations for demonstrations, strikes and a legal struggle against the THY's privatization," the union's secretary-general Mustafa Yagci said. 


Turkey aims to bring in total revenue of $7.6 million from privatization in 2000. — (AFP, Ankara) 


by Hande Culpan 


© Agence France Presse 2000

© 2000 Mena Report (www.menareport.com)

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