|Turkish President Abdullah Gul approved the Labor Law which is publicly called "employment package" on Sunday. The Package was criticized by economists because of the amnesty to premium debts of employers to Social Security Institution it brings.
Under the law, the government erases 85 percent of debt interest of those who pay their premium debts to SKK and Bag-Kur in full and 15 percent of interest for those who delay payment by one-month. The law also brings a 55 percent discount on debt interest due for those who pay in one year, and 30 percent for those pay within 24 months.
The amount of the amnesty to restructure the premium debts of employers is expected to worth 23.4 billion YTL ($18.7 billion).
The law also cuts employers' social security premiums by 5 percentage points, a move came after the intense demands of foreign investors.
The amnesty decision contradicts the letter of intent sent by the government to the International Monetary Fund (IMF) in late April. As part of the discussions regarding the new IMF stand-by deal, the government had said it would not offer an amnesty on social security debt.
According to the law, unemployment Insurance Fund will subsidize SSK premiums of newly employed women and unemployed people between the ages of 18 and 29 for five years.