Turkey’s unemployment rate rose to 9.7% last year from 9.2% in 2012, the statistics institute TUIK announced on Thursday.

The non-farm jobless rate rose to 12% last year from 11.5% in 2012, while the labour-force participation rate increased to 50.8% from 50%, according to TUIK data.

TUIK calculated the number of unemployed at 2.75mn as of end-2013, up from 2.52mn jobless in 2012. The urban unemployment rate rose to 11.5% in 2013 from 11.1% in 2012.

The Turkish economy created a total of 703,000 jobs last year, most of them in in the service sector. TUIK data showed that the number of employed in the service industry increased by 507,000 while the industry sector created 277,000 jobs. Employment in the agriculture sector declined by 82,000 last year. 50% of the work force was employed in the service sector, 26% in industry, and 23% in agriculture, TUIK said.

The government expects the economy to expand 4% this year, and it projects the unemployment rate at 9.4%. The official unemployment rate estimate for 2013 was 9.5%.

A separate data from TUIK also showed that the seasonally & calendar adjusted labour cost index rose by 4% q/q in Q4/2013. In the whole of 2013, the calendar-adjusted index increased 12.5%. The seasonally & calendar adjusted labour costs increased 3.8% q/q in the final quarter in the industry sector while the increase was 3.2% q/q in the construction sector and 4.3% in the service sector.

On a calendar adjusted basis, labour costs rose 9.9% y/y in the industry sector last year, increased 15% y/y in the construction industry and 15.2% y/y in the service sector.