Turkey’s SME Sector Faces Productivity Hurdle

The current economic landscape reveals a stark divide: Turkey’s MSMEs generate an average of EUR 13,458 per worker, barely a third of the EUR 41,776 produced by larger firms. This gap is exacerbated by high inflation, which reached 44.4% in 2024, and a persistent informal employment rate of 26.6%. While agencies like KOSGEB and TÜBİTAK provide extensive funding, the OECD report highlights that these efforts often prioritize the volume of beneficiaries over tangible improvements in firm performance or innovation.

Financial and structural barriers further hinder growth. Bankruptcy proceedings remain sluggish, often lasting five years, which prevents the effective restructuring of distressed but viable companies. Additionally, the workforce faces a skills deficit, with adult participation in learning at 8%, significantly lower than the EU average. To bridge these gaps, policymakers are urged to shift focus toward measurable outcomes—such as export growth and technology adoption—rather than simply distributing financial disbursements. Success now depends on integrating vocational training with digital and green investment strategies to ensure smaller firms remain competitive as global requirements evolve.