Social security reform and informal economy in Turkey

Social security reform, which came into force in Turkey in 2008, brought about a conversion in terms of old age and sickness insurance. This reform is a necessity of structural adjustment policies prescribed by International Money Fund and World Bank. These policies, essentially, are built upon reducing social expenses and promoting individual responsibility by means of weakening solidarity.Approximately, half of the labour force in Turkey is employed in the informal economy. Informal workers who work under low wage and insecure working conditions are excluded from social security system. It does not seem possible to extend social security coverage in Turkey, while informal economy shows a tendency to grow significantly. As a matter of fact, reform reduces social rights and causes the system to lose its function of income redistribution. Financial sustainability of the system is attributed to reducing the share of social expenses allocated in national budget and the cost of social protection is laid a burden on workers.This thesis aims to analyze the relation between social security reform and informal economy in Turkey. In the first section, concepts of social security and informal economy are explained. In the second section, fundamental reasons and implementation methods of social security reform, generally in developing countries and particularly in Turkey, are examined. Finally, in the third section, the relation between social security reform and informal economy in Turkey is questioned in the context of creating and distributing income.Keywords: Social Security, Informal Economy, Reform, Structural Adjustment Policies, Unfair Distribution of Income