Announcement of World Bank Supports Second Privatization Social Support Project in Turkey on June 14, 2005

Turkey: World Bank Supports Second Privatization Social Support Project Contacts: In Ankara Tunya Celasin 90 312 459 83 43 Tcelasin@worldbank.org In Washington Miriam Van Dyck 1 202 458 2931 Mvandyck@worldbank.org Washington, June 14, 2005 - The World Bank today approved a US$465.4 million (Euros 360 million) Second Privatization of Social Support Project Loan (PSSPII) for Turkey. The project's main objective is to support the Government's privatization program through mitigating the social and economic impact of the privatization of state-owned enterprises (SOEs). The Government's privatization program aims to enhance the efficiency and competitiveness of the Turkish economy and thereby help in meeting the market demands of EU accession. The Privatization Administration will be in charge of the overall implementation of the project, which is composed of the following components: Job Loss Compensation: This component will ameliorate the temporary social and economic impact on workers displaced during the privatization of SOEs. It will finance severance and related payments, as regulated by law, to workers displaced by job loss due to the privatization of SOEs. Labor Redeployment Services: This component will provide labor redeployment services to workers who have been displaced by the privatization of SOEs, including secondary layoffs, to assist them in rapidly re-entering the labor market. The component will finance a variety of labor redeployment services, including job counseling and placement services, retraining, temporary community employment (managed by the Turkish Employment Organization - ISKUR), small business assistance services, and small business incubators (managed by the Small and Medium Industry Development Agency, KOSGEB). Management, Monitoring and Evaluation: The objective of this component is to monitor the impact of labor redeployment services and manage the PSSP II effectively as a whole. The component will finance surveys to evaluate the effectiveness of the labor redeployment services in mitigating the social costs of labor redundancies resulting from employment and privatization on selected communities; and undertake in-depth socio-economic analyses of specific communities where privatization has taken place. "The World Bank is pleased to help the Government of Turkey in increasing the productivity of state-owned enterprises undergoing privatization by cushioning the social impact of labor displacement during privatization and economic reform," said Andrew Vorkink, World Bank Country Director for Turkey. "Enhancing the competitiveness of the Turkish economy is a pre-requisite for eventual EU accession. The project will ensure that there is a social support program that is directly linked to, and will support, the implementation of the privatization program." PSSP II will mark the continuation of the first Privatization Social Support Project that started in 2001. PSSP I helped support the Government's effort to disengage itself from production activities and thus foster the continuing development of the private sector in Turkey, reduce the socio-economic impact of privatization, and mitigate the negative impact of economic instability on poor households. The lending instrument for the Second Privatization Social Support Project is a Specific Investment Loan (SIL) in Euro with a 17-year maturity, including a 4-year grace period. For more information about the World Bank's work in Turkey, visit: http://www.worldbank.org.tr