Turkey’s despair rises

Turkey’s despair rises
Shanty dwellings in Ankara.
By bne IntelliNews December 1, 2016

Extremely high levels of poverty by European standards have pushed Turkey’s Despair Index up over the 40% mark – a level usually associated with popular protest and coloured revolutions in the CEE/CIS region.

bne IntelliNews’ Despair Index, a proprietary index that combines the rates of poverty, inflation and unemployment to give an indication of what it is like for people in the bottom third of society, paints a grim picture for Turkey. 

According to a survey by Turkish state statistics agency, just over one in five households (22.4%) are living on or below the poverty line. 

But the number of people living in poverty is contentious and even amongst government agencies they use different criteria for setting the poverty line. Turkey’s largest labour union, TURK-IS, conducts monthly surveys to determine the hunger threshold and poverty line (based on a four-member family’s needs ranging from food, rent and clothing to entertainment and cultural activities): it set the hunger threshold at TYR1,334 ($499) and the poverty line at TRY4,344 ($1,626) in April last year. Under this method, over half of Turkey’s population would be considered impoverished. 

Poor households are also very vulnerable to changes in inflation. Inflation has fallen somewhat in Turkey. Consumer inflation was a painful 9.58% in January, although it has since fallen to 7.16% in October.

And of course persistent unemployment drives poverty; that started the year at 11.1% of the Turkish population and after a mild fall in the summer was back to 11.3% in August, the latest data available. 

All this has impacted the country’s Despair Index. The baseline for the index is a theoretical 6 (no poverty, 5% residual unemployment, 1% residual inflation); the best score of any country in the last 20 years was France with 6.1 in 2001, but since then scores of 25-30 are typical. Adding up the numbers for Turkey, and assuming the lower number for poverty, (22.4%+7.8%+11.3%) gives Turkey a Despair Index score of 41.6%, which is extremely high by European standards. 

Currently, the Despair Index for the leading Organisation for Economic Co-operation and Development (OECD) countries ranges from the top-ranked Iceland with 9.6 followed by Denmark (9.9), Switzerland (11.6) and the Czech Republic (11.8), which is the highest ranked country from the former Eastern Bloc, down to bottom of the list Spain (35.5) and Greece (38), which are both ahead of Turkey. Only Ukraine does worse than Turkey with a score of at least 50, based on a conservative poverty level estimate of 30, but the true figure is almost certainly much higher. 

In Emerging Europe, many countries’ Despair Index scores are starting to fall, largely thanks to decreasing inflation. Russia’s Despair Index peaked at 33.7 in September 2015 and remained elevated at about the same level for all of 2015, but thanks to the rapid fall in inflation this year, the index was only 26.2 in September – its lowest level this year.