Secret Dynamo of the European Economy

Germany, not being able to meet the labor needs of its growing economy after the Second World War, opened its borders to Turkish workers with the “labor recruitment agreement” of October 30, 1961. Following this agreement, thousands of Turkish workers arrived in Germany, starting the Turkish immigration to Europe.
When, after an oil crisis and economic recession, Germany stopped the recruitment in November 1973, after 12 years, the number of Turkish immigrants had reached 900 thousand. Immigration, meant to be halted after this date, continued through family unification.


As time passed, it became more obvious that this immigration, considered to be temporary not only by Turkey and the immigration-accepting countries, but even by the immigrants them-selves, was turning out to be a permanent one. This permanency in Europe represented struc-tural changes in the lifestyles of immigrants.
The first workers arriving in 1961 were mostly men. These “expatriates” were hoping to return to their country after a short period and invest their savings in their towns and villages, and enhance their social status. As the years followed each other the men did not go back, but in-stead brought their families over. By 2002, the ratio of men to women had become more bal-anced.

Since its establishment in 1985, the Center for Studies on Turkey (TAM) has been investigat-ing the investment dynamics of Turks in Europe. A scientific survey of 846 businessmen con-ducted in June-July 2005 is an example of the Center’s important research in this area.

According to the study, the number of Turkish immigrants who have obtained German citizen-ship, either by birth or by naturalization, is about 840,000. As of 2004, also taking into account the 1.8 million Turkish citizens living in Germany, the number of people of Turkish origin exceeded 2.6 million. The importance of these figures is that 32% of the Turks living in Ger-many are German citizens, and they are part of German society, passing beyond any discus-sion of adaptation.  

The number of Turkish entrepreneurs, which in 1985 was 22,000, by 1990 had increased sig-nificantly, to 33,000. As of TAM´s twentieth anniversary, in 2005, that number is 64,600. These data indicate a threefold increase in the number of Turkish businesses active in Ger-many over the past 20 years.

The data obtained from this research indicate that the average age of Turkish entrepreneurs is about 37.2. This indicates that a significant portion of Turkish entrepreneurs consists of sec-ond-generation immigrants. According to the research, the average duration of stay of Turkish entrepreneurs in Germany is 23.8 years. The research also obtained interesting data about citi-zenship. Although the acquirement of German citizenship is c. 32% in the Turkish community, this percentage is 39.6% among Turkish entrepreneurs.

A considerable portion (77.4%) of these businesses claim sole proprietorship status. Put against the total number of businesses, the number of businesses under sole proprietorship works out to 50,000. Companies with ordinary partnership (GbR) status make up about 10% of the total, and the number of limited companies is over 8%. Businesses with other legal status (e.g. incorporated, and others) constitute 4.2% of the businesses that took part in the study.

In addition to numbers such as these, the boom in Turkish entrepreneurships can also be ob-served in the sectors in which they are active. Turkish entrepreneurs progressively became present in all sectors. More than half of the Turkish entrepreneurs are active outside the ethnic markets, in which mostly only immigrants work. Artisanship, production and construction account for about 17% of the total number of businesses.

The variable accepted to indicate the size of an enterprise is the number of people employed in that enterprise. Looking at the situation in Germany, on average Turkish businesses provide employment to five people.

In addition to the number of people employed by Turkish entrepreneurs, determining the dura-tion of the entrepreneurs’ self-employment is of importance in examining development in terms of stability and experience. The research conducted indicates that the average Turkish entrepreneur has a small-to medium-sized business and has been doing business for 8.9 years.

When investigating important economic indicators, the significant progress of Turkish entre-preneurs becomes obvious. According to the survey conducted, Turkish entrepreneurs in 2005 had a gross turnover of 457,000 Euro on average. The main reason for the decrease in turnover compared the previous year is explained by the presence of small businesses, called Ich-AG, supported to decrease the unemployment rate. In contrast to the decrease, the total gross turn-over of Turkish businesses reached 29.5 billion Euros.
In 2005, after a decrease of .1 billion Euro, the total investment of Turkish enterprises hit 7.4 billion Euro, and the average investment per business regressed from 119,000 Euro to 114,000 Euro. This negative development indicates a regression of c. 4.2%. The reason for the decrease in investment volume is the same as for the decrease in gross turnover. The recent increase in the number of investors is in small businesses active in the trade, service and gastronomy sec-tors, instead of enterprises that could promote growth.

Another important point about Turkish investors is the increase in employment created by their economic activities and successes. According to this study, a Turkish business employs 5 people on average. The total number of people employed by Turkish businesses reached 323,000 in 2005. The increase in this area did not match the increase in the number of busi-nesses. Turkish businesses, mainly small and family businesses, have the potential to create more businesses, when they obtain more experience in their sectors.

According to TAM’s calculations, the number of entrepreneurs of Turkish origin within the borders of the EU is 94,000. This number represents 7.2% of the 1.3 million working-age population. In 1995 the 54,300 Turkish entrepreneurs represented 5% of the working-age population. The increase of Turkish entrepreneurs within the last decade is 73%.

Calculations based on the empiric research conducted by TAM indicate that between 1995-2005 the annual gross turnover of Turkish businesses increased from 21.6 billion Euro to 40.5 billion Euro. This corresponds to a growth of 87.5%. Similar developments can be observed in total investments and employment. Within the last decade, investment in Turkish businesses increased 92%, from 5.3 billion Euro to 10.2 billion Euro. The number of people employed by Turkish businesses increased during the same period from 212,000 to 451,000.

The economic crisis and the excessive competition in the traditional sectors are the main rea-sons behind the decrease in the average gross turnover and investment per business. Neverthe-less, the number of businesses showed an increase of 73%. The growth in business turnover and in labor is dependent on the growth in the number of businesses. The Turkish entrepre-neurs in the EU have a history going back up to 20 years, depending on the date of immigra-tion. The average length of time in business is 8.9 years. Today’s small and family businesses will fulfill a major trade function between the EU and Turkey in the future. Turkey’s candi-dacy for membership in the EU will be an accelerating factor.

Considering the developments of today, the trend toward dynamic entrepreneurship will con-tinue among Turkish immigrants in the EU, particularly in Germany. Based on their projec-tions, TAM estimates that the number of Turkish entrepreneurs will reach 160,000 in 2015, doubling their current numbers. Parallel to these developments, it is estimated that by that year Turkish entrepreneurs will achieve a gross turnover of 87 billion Euro and employ 960,000 people

- Acceptance of permanent residency in Germany.
- Increase in education levels among immigrants.
- The integration of the younger generation in the socialization process in Germany.
- The disappearance of legal disadvantages, through the acquisition of German citizenship and the reform of legal statutes.
- The desire to prove self-worth, fueled by the discrimination experienced through being members of a minority group.
- Mass unemployment due to the closing of enterprises in the steel and mining sectors, where Turkish workers are dominantly employed.

Legal Status                    Number    Percentage (%)
Sole proprietorship        50,000        77.4
Ordinary partnership        6,300        9.7
Limited Companies         5,600        8.7
Other                                   2,700        4.2
Total                                  64,600        100
Source: Foundation Center for Studies on Turkey, Essen 2005    

Sector                                                                            Number    Percentage (%)
Trade                                                                             22,400        34.6
Restaurants                                                                 16,600        25.7
Service Sector                                                              14,700        22.8
Artisanship, production and construction               10,900        16.9
Total                                                                                64,600        100

Source: Foundation Center for Studies on Turkey, Essen 2005

Employees                    Number    Ratio (%)
Up to 3 people              33,400        51.7
4 – 9 people                  25,900        40.1
10 or more                       5,300        8.2
Total                               64,600        100

Source: Foundation Centre for Studies on Turkey, 2005

Turnover level                        Number    Ratio (%)
Less than 150.000 Euro        9.100          14,1
150.000 – 300.000 Euro        17.800        27,5
300.000 – 500.000 Euro        16.500        25,6
500.000 -700.000 Euro          15.300        23,7
Over 700.000 Euro                    5.900        9,1
Total                                           64.600       100
Average Gross Turnover: 457.000 Euro
Resource: Foundation Centre for Studies on Turkey, Essen 2005

Investment Volume                Number    Ratio (%)
Less than 50,000 Euro        14,900        23.1
50,000 – 100,000 Euro        18,300        28.3
100,000 – 150,000 Euro      14,500        22.4
150,000 – 200,000 Euro      11,400        17.6
250,000 Euro                            5,500        8.6
Total                                         64,600        100
Source: Foundation Centre for Studies on Turkey, 2005

                                                          1995        1997        1999        2001        2003        2005    
Indicator Number                          54,300    62,100    73,200    81,000    87,600    94,000

Average investment
per business (€)                           97,000    97,100    107,400    109,00    111,000    108,500

Total investment
volume (bn €)                                 5.3    6.0    7.9    8.8    9.7    10.2

Average turnover
per business (€)                           397,300    415,200    427,400    430,800    439,000    430,700

Total turnover (bn €)                     21.6            25.4           31.3           34.9           38.5           40.5

Employees per business            3.9              4.1             5.0              5.0             4.9              4.8

Total employees                         212,000     254,000    366,000    405,000    429,000    451,000    

Source: Foundation Centre for Studies on Turkey, Essen 2005

(May 2006, 20th Issue)
Last modified onSaturday, 06 May 2017 10:07