turkish economy with the world. in this framework, exports, which rose by 151. 5 percent cumulatively from 2001 to july 2006, made a critical contribution to the rapid growth observed for the last four years. domestic and foreign competition, which increased due to the increased number of firms that took up export activities and entered international markets as a result of integration with the world, led to a decrease in profit margins in these sectors. in such an environment, productivity increases become the main factor in competition. sectors with the highest productivity increases became the sectors, which grew most rapidly and increased their exports the most. studies to increase productivity and specialization in technology and capital - intensive sectors that create high value added are more critical for the sustainability of increases in exports in the long term, than the advantage of exchange rate movements. in order to be able to persevere in such a strong competitive environment, medium and long - term strategies – rather than short - term perspectives – are needed. to this end, public and private sectors should act in cooperation and harmony. in this framework, the public sector should try to create an environment for the private sector, in which it can compete with competitors in international markets under market conditions. in the meantime, the public sector should continue to take measures in order to increase its productivity, build robust and transparent balance sheets, turn towards capital markets, attend to risk management principles and try to allocate resources for research and development activities. when we look at the course of growth in 2006, we see that indicators of consumption and investment expenditures provide signals for a rapid course of growth in the second quarter of the year. meanwhile, it is anticipated that the environment of uncertainty created by the fluctuations in financial markets in the second quarter will affect domestic demand in a slightly unfavorable manner and hinder the rapid growth process, starting from the third quarter of the year onwards. the declines in the central bank business tendency survey indicators and domestic sales of automobiles as well as the fall in the consumer confidence index also support this anticipation. thus, it seems likely that the rate of growth will decelerate to a certain extent in the second half of 2006 and the first half of 2007. at this stage, i would like to draw your attention to the following point : what turkey needs is to sustain growth at levels close to its potential. the uninterrupted course of growth in recent years is just the beginning. this process is a dynamic one. structural reforms are extremely important and should be

obtain higher wages, and by the fact that employers always prefer to fire the least productive workers. in fact, the unemployment rate in spain for persons with only a primary education has increased in 2008 by almost 8 pp, as against 5 pp in the case of those with a secondary education and only 2 pp in that of persons with a further education. the data also show that not only are the largest increases in the unemployment rate among groups with lower levels of education, but that these groups also have the highest unemployment rates. yet we should not only strive to improve the educational attainment of our workers before they start working. we should also promote training within the firm. if we managed to make our labour market institutions more like those of other developed countries, we would also do away with labour market arrangements that hinder workplace training and do not give employers any incentive to improve their firms ’ human capital. we urgently need a debate between all political, economic and social agents to convince them of the need for reforms. the government and the parties who support it, the opposition parties, trade unions, employers, academics, researchers and the media should all participate. and we should not forget those who the reforms would benefit most : unemployed workers and employers who still do not exist, but who would be able to if there were a significant structural change in labour market institutions. without sufficient social acceptance this debate will obviously not even be joined, so it is very important to clearly underline the objectives pursued which i ’ ve repeated ad nauseam in this speech, but which i shall attempt to express again in a different way so as not to tire you. we should all agree that the best protection against unemployment is not that which concerns itself with subsidising the unemployed, but that which ensures that the majority do not lose their job. we should admit that it is useful to allow employers to improve their productivity because that way we will see higher real wage growth. and, finally, we should let workers take the opportunity to switch to better - paid jobs without losing a substantial part of their protection in the event that they lose such jobs. you will have realised that my approach to the debate on labour market reform is far removed from that of those who confine it to the question of whether or not to lower dismissal costs. in my view it is a mistake to debate cheaper firing alone, and i believe that we can only make headway if we focus on finding formulae that allow us to increase productivity, to reduce the numbers