2012-02-06

Despite growth, income inequality persists

The numbers on income and living conditions may be questioned by experts of different backgrounds, but they all agree there is a wealth distribution problem on some level.

By Ozgur Ogret for SES Türkiye in Istanbul -- 06/02/12

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According to the Turkish Statistical Institute's (TUIK) “Income and Life Conditions Research, 2010”, 16.9% of the population is living below the poverty line. The same research indicates that when the people are divided into five income groups of 20%, the top group receives 46.4% of total income while the bottom group has 5.8%.

  • Not everybody has benefited from the country's economic growth in the same way. [Reuters]

    Not everybody has benefited from the country's economic growth in the same way. [Reuters]

Economist Emre Deliveli told SES Türkiye the research results don't reflect the economic development of the past few years, "Or, they may make you feel economic development has not touched the masses."

Calling TUIK's statistics "partly true", Deliveli cited another research by colleagues Cevdet Akcay and Murat Can Aslak. "The middle classes have been increasing their share of consumption in the past few years, at the expense of the richest and the poorest," he said, based on that research.

Deliveli cited the Ümraniye and Güngören districts of Istanbul as examples where "these booming lower-middle, middle classes" live, adding that they are one of the main reasons for the Justice and Development Party's (AKP) success.

Daily Cumhuriyet columnist Mustafa Sonmez had a different angle on the TUIK research, claiming that TUIK's numbers are wrong because people hide their incomes. Criticising the statistics institute's methodology, Sonmez told SES Türkiye that incomes are being hidden.

According to Sonmez, taxpayers do not declare their full incomes, hiding real estate rent incomes or amounts they receive through interest accounts, all of which lowers the poverty line as the richer people portray themselves as less wealthy.

"Both the income total is being presented smaller than it is and the injustice and rifts in the sharing are being hidden," he argues.

Regarding high levels of income inequality, political scientist Burak Cop told SES Türkiye that TUIK research supports that. Although he agreed with Deliveli's assessment that the AKP's election success lies in the enrichment of the middle class, he says high unemployment rates remain a structural problem.

Cop said the logic in practice seems to be hoping structural problems would go away as the economy grows and unemployment drops. "I do not believe structural solutions would arise with this mentality," he says.

Similarly, Deliveli says inequality is structural, citing the reasons for this as low women's labour force participation, low average education, very high, distortionary indirect taxes and low direct taxation.

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