In the context of the project for the "Promotion of Employment and Business Potential in Urban Informal Sector", a questionnaire was applied in order to obtain the overall profile of informal enterprises active in the central town of Diyarbakir. This work took place in the period 7-10 December 2000. The target group in this questionnaire work had been envisaged as artisans and craftsmen, including street vendors, active in the city and estimated, though no official record is available, to be consisting of some 20,000 people. The questionnaire was applied to 678 entrepreneurs, of whom 83 were street vendors, all at the center of the province. This paper examines the main findings of the survey in the context of the structural characteristics of local economy in Diyarbakir and makes some specific suggestions for the promotion of the informal sector in this city.

As the economic, cultural and administrative center of the region located at crossroads, the city of Diyarbakir has its historical and geographical significance and is also endowed with rather advanced human resources and cultural fabric. However, in spite of achievements deriving from its past and environs, the city has recently been suffering an economic and social stagnancy and even a decline. Failure in getting industrialized is the main factor lying behind the problems that Diyarbakir is presently facing.

The most important problem for the city in recent years is the process of migration that is assuming mass dimensions. Diyarbakir is receiving in people from a rather wide area including its own villages and towns and the leading push factors for this population movement include rapid population increase in rural areas, rather large section of petty farmers and landless peasants, and massive rural unemployment. Also, once escalating armed clashes and security measures adopted as a response further accelerated this process of migration. As a matter of fact, the population of metropolitan Diyarbakir almost doubled to reach 800,000 within the last ten years.

While urban labor supply is on a rapid rise, the economy of the city cannot keep in pace in creating new employment opportunities. Though somewhat slowing down, high fertility and population growth rates still continue. A half of the population of Diyarbakir is under age 15. All these facts point out that for the city of Diyarbakir employment will be the most important problem of the next decade. Another problem related to the labor side is the low level of education and unskilled status of many people in the local labor force. There is no doubt, then, efforts and initiatives to boost productivity and employment gain paramount importance under such circumstances.

Public investments in Diyarbakir have long been rather weak, somewhat climbing up only in the last few years. Public investments concentrate mainly in the sectors of energy, agriculture and infrastructure. Investments in health, education and other public services, however, are far from responding to the needs of a rapidly growing population.

In the city of Diyarbakir and its environments, the sector of agriculture could not play the role of a driving factor in supporting and encouraging urban economy and industrialization. Agricultural sector has been extremely weak in constituting a market for the sectors of industry and services, producing inputs and transferring resources and capital for industrial investments. The decline of the sector of agriculture in the region resulted in a serious shrinkage of demand for the business community in Diyarbakir. An environment of instability and uncertainty drove local capital accumulation out of the region and this, in turn, further pulled down savings and investment in the region. And finally, the heaviest blow to the economy of the region as a whole in the 90s was the cessation of border trade, which used to take place with neighboring countries including Iraq as one of the major trade partners of Turkey, following the Gulf War of 1991. Shrinkage of demand from the rural sector, decline of border trade and transportation and acceleration of capital outflow from the region all added up to weaken the economy of Diyarbakir further and make it dependent to other regions in terms of many basic products and inputs.

As of 1995, while the share of the sector of industry in total employment was around 12 % in the country as a whole, it was only 3.1 % in Diyarbakir. The share of manufacturing industry in the GNP is 25 % as a national average, but it falls to 4.1 % in Diyarbakir. The industrial sector in Diyarbakir is weak in terms of diversification and existing industries concentrate in foodstuffs, textiles and garment, chemicals-petroleum, earth-stone processing and metal works. It is possible, furthermore, to say that enterprises and employment concentrate heavily (78 %) in only two branches (foodstuffs and textiles).

In sum, in spite of its promising economic and social potential, the city of Diyarbakir is facing the problem of massive unemployment as a result of such factors as political turmoil, decline of the sector of agriculture, insufficiency of public investments and low level of industrial base. Consequently, launching initiatives to create new channels of employment and income generation is of great importance for boosting economic development and raising the level of social welfare.

In terms of demographic and social indicators, the leading characteristics of small entrepreneurs in the city of Diyarbakir can be summarized as follows: Small entrepreneurs are mostly young or middle-aged people and their educational status indicate that they are mostly primary/secondary school graduates. While there is almost no university graduate among these entrepreneurs, there are even some who are illiterate (5 %) accompanied by primary school dropouts (12.9 %). Nevertheless, the presence of a group (40 %) having a status higher than secondary school standards points to the possibility of implementing various training programs. A significant part of small entrepreneurs were born in the city and other town centers. The great majority of respondents consist of those who were either born in Diyarbakir or have been living in this city for more than 10 years. Finally, many small entrepreneurs have fathers once engaged in trades that fall in the category of "urban employment." One important conclusion we can reach by moving forward from the demographic and social characteristics of the group is the following: The city of Diyarbakir is populated, with some weight, by newcomers of rural origin, a fluctuating or mobile population who have low educational status and who lack many skills for gainful employment. On the other hand, the artisans and tradesmen of Diyarbakir, with the exception of street vendors, are mostly people of urban origin, having relatively higher level of education and skills, and also displaying rather settled features. In this sense, the small entrepreneurs of Diyarbakir constitute one of the pillars of the urban community promising stability in economic, social and cultural terms.

Of the entrepreneurs of the informal sector covered by the survey, 35.5 % are craftsmen active in material production while 52.2 % consists of tradesmen mainly in the sector of services. Going more in detail with specific occupations, one-third of craftsmen are in repair works. With the exception of a small number of those active in some special branches (i.e. electricians, car repairers, photographers, dealers of durable consumer goods), the majority of trades are traditional ones maintained for some decades or even longer. Still, we can assert that the industrial sector in Diyarbakir has undergone a process of activity diversification in rather important dimensions and also that there have been some important changes in individual trades in terms of techniques, content and organization. For example, barbers stand for one of the most traditional trades, but coiffeurs giving service to ladies are much more open to change and novelty with new tools, materials, information, techniques and modes of relationship. As diversification in the informal sector proceeds, some new trades emerge while others disappear and many traditional trades undergo a process of change in terms of technology, methods and production techniques.

Three-fourths of all small entrepreneurs state that they have been engaged in the same trade for at least 5 years. Those who are engaged in their present work for longer than 10 years constitute more than a half of total respondents. 60 percent of respondent have never changed their trade in their working life and the majority of the remaining has done this only once. This points out to the fact that there is stability in maintaining individual trades and small entrepreneurs constitute a settled and stable section of the society.

Among these people, those who have received formal vocational training are extremely limited (1.5 %). Two-thirds of small entrepreneurs state that they have mastered in their present trade through master-apprentice relationship. For one-third of enterprises, the time required to master in trade is less than a year. For the majority, however, this mastery requires more than one year. Taken in general, it appears that mastery in any craft takes longer time than mastery in trade.

It appears that only a half of enterprises covered by the survey employ wage workers. A great majority of enterprises employing workers or, to be more exact, four-fifths of such enterprises are small establishments employing less than 5 persons. Those enterprises employing more than 5 workers constitute 8 % of enterprises covered by the survey. This latter category can be considered as small capitalistic enterprises where wage labor and capitalist mode of production dominate. Small enterprises employing two to four workers seem to be the most willing to accept novelties, progress and further development.

The survey shows that three-fourths of employees are young, in other words they are apprentices and journeymen, while one-fourth are at master status. To put it differently, it appears that only 13.3 % of enterprises employ trained and skilled labor. These point out to the fact that wage labor is not employed only for short periods of time. In other words, a significant part of employees remain in their employment long enough to acquire relevant occupational skills.

Affinity of employees to their employers can be gathered under three categories: Unpaid domestic labor (30.9 %); relatives-fellow townsmen-acquaintances (30.3 %); and others of no affinity (38.5 %). The common practice of employing relatives-fellow townsmen-acquaintances is a manifestation of the feelings of responsibility, obligation and trust towards such people. In recruiting hands, employers look for trustfulness and loyalty as much as they look for knowledge and skills. It is also interesting to note that small entrepreneurs who prefer to employ people other than those in their closer circles have relatively higher educational status and many of them are of urban origin. Those who particularly emphasize their need for technical support and training are again small entrepreneurs who employ others and who are more open to outer world.

One-tenth of all enterprises and about one-fifth of those employing workers have people attending apprenticeship training. In fact, this ratio is not as low as it seems at the first glance since one-fifth of all enterprises state to be employing people in apprentice status. In other words, in every two enterprises employing apprentices, one has an apprentice enrolled to apprenticeship training. Enterprises that send their young employees to apprenticeship training are also those most insistent in their request for technical support and training.

23.5 % of small enterprises have somebody with a craftsmanship certificate. This percentage also includes entrepreneurs themselves who have such a certificate. While there is none having this certificate among street vendors who constitute 12.2 % of small entrepreneurs, many shopkeepers (such as grocers, coffee house owners, sellers of leather products, etc.) also lack the certificate. On the other hand, a high proportion of those running tailor shops, barbershops and butcheries have such certificates since their trade require some level of mastery. In short, those having craftsmanship certificate concentrate in rather limited fields of business.

While one-third of small enterprises own their work places, just over a half run their businesses in rented work places. Ownership of workplace is little higher among craftsmen compared to shopkeepers. As can be guessed beforehand, ownership of work place becomes more common higher the level of income.

Comparing formal and informal channels in access to credit, it is observed that this access takes place through informal channels mostly. Taking bank credit and credit by Artisans’ Guarantee Cooperatives together as formal channels of credit, these have a share of only 5 % in total credit use. This situation clearly shows the inadequacy of formal credit lines in supporting small entrepreneurs. As a matter of fact, mobilization of external resources for small enterprises takes place mostly through face-to-face private contacts and on the basis of personal trust. In this context, it is possible to talk about the existence of two different groups. In the first group, affinities are based on origin and kinship ties such as those observed among family members, relatives and fellow townsmen. In the second group we observe friendship and business ties. 36.7 % of those who use external financial resources in their businesses state that the source of this support is other artisans and craftsmen. Thus close business circles seem to have a serious capacity for social capital formation. Especially in the field of crafts, common practice of sharing information, tools and machinery among closely located work places points out to the dimensions of mutual trust and social capital formation. In fact, while craftsmen take loans mostly from others in the same profession, shopkeepers and particularly street vendors resort to their families and relatives for loan. We can thus conclude that craftsmen who share the same business environment for a long time and who are engaged in similar or complementary works are more inclined to values for sharing what they have and further strengthening social capital.

Input costs constitute, for the majority of small enterprises, one of the leading causes of financial bottlenecks. Small entrepreneurs state that they face various problems in providing for their raw material needs and about half of them make specific reference to high input costs and payment difficulties as their basic problem. There are also others stating such problems as difficulty in reaching high-quality inputs (17.8 %) and transportation (9.5 %). Inputs that are generally manufactured in other parts of the country reach artisans, craftsmen and shopkeepers in Diyarbakir via a rather developed network of trade. Three-fourths of small entrepreneurs in Diyarbakir, however, procure their raw materials and final products from Diyarbakir. 7.5 % of inputs are procured from the provinces of Eastern and Southeastern Anatolia. Istanbul is the origin of 11 % of inputs used by small entrepreneurs in Diyarbakir.

While small entrepreneurs in Diyarbakir are somewhat dependent to other regions in procuring their raw materials and inputs, they are rather weak in providing goods and services to other regions and provinces. In fact, the proportion of those who can market their goods in other places is even under 1 percent. Two-thirds of small entrepreneurs in Diyarbakir have their sales directly to clients or they produce on order. Those engaged in outsourced production are too few to be significant in statistical terms. Only 4 % market their goods through other traders.

In relations of mutual support and solidarity among small producers two modes come to the fore. Those who have their relatives in their business environments state that they first resort to these people for help and support. On the other hand, for another part that constitutes a half of all small entrepreneurs, fellowmen in the same trade constitute the primary reference point for help and support. This shows that acquaintances and relationships formed in business environments have reached significant dimensions and such acquaintances and relationships can be transformed into more developed networks of mutual help and solidarity. The business circle stands for, in this sense, a social environment of values and ethics commonly shared by many small entrepreneurs. Especially in enterprises engaged in producing finished goods and services, joint use of tools and machinery as well as exchange of experience and skills indicates that there exists a system based on sharing occupational information, techniques and organizational experience.

Parallel to what is stated above, we can take a look at the three ways through which technical information and skills are acquired by others. More than a half of all respondents state that they acquired their present occupational information and skills from their masters. This is followed by "written materials" (37 %) and business-occupational tours. This clearly shows that acquisition of occupational information and skills through face-to-face relations, direct observation and practicing, which can be called the "traditional" one, is more important than formal and institutional channels of information and skill formation.

In industrial quarters particularly, workplace based relations further enhance solidarity among small producers. As they come to know each other better and develop a sense of mutual trust, small entrepreneurs start to support each other materially, share their resources, exchange their information and experience and thus spontaneously have their personal information and techniques appropriated by larger circles. It is through this network of community relations and environment of trust that what is called social capital comes to existence and develops further.

We can analyze small entrepreneurs in three income groups as "lower", "medium" and "higher." It would, however, be more realistic to define these groups in US dollars considering the recent dramatic fall in the value of TL. Hence, a monthly income below 375 US $ defines the lower income group; medium income group is composed of those with an average monthly income varying from 375 to 750 $, and finally others with a monthly income of over 750 US $ make up the higher income group (1 US $ = 675,000 TL).

What needs to be emphasized here in terms of income and income distribution is the fact that average income level is rather low. To give an example, the average monthly income of a small producer placed in the middle of the medium income group is 562.5 US $. Small entrepreneurs come from families with a size of 7-8 members on average and only one or two in the family can find employment. If average income calculated as 562.5 $ a month and 6,750 $ a year is divided among family members we get an average annual income of about 1,000 $, which corresponds to one-third of per capita income in Turkey. Furthermore, while small entrepreneurs enjoying higher status than this average remain only as one-fifth of all, the majority is at much lower levels. The higher income group in which monthly income is above 750 $ and annual income per family member is above 1,250 $ constitutes only 8.8 % of all small entrepreneurs. Since income derived from the main occupation is at such low level, it can be considered whether these people have a secondary business or a source of income. However, only 7.8 % of these entrepreneurs have a second business or another source of income.

Those belonging to the lowest income group are relatively younger than others. Having more young people in the lower income group can be partly explained by the fact that street vendors are mostly young people. It should also be noted that the level of income rises along with the level of education.

Three-fourths of small entrepreneurs state insufficient financial resources as the most important problem they face. This response reveals that small entrepreneurs have rather weak equity capital-resource base. Other than this, another important problem pointed out by respondents is rather limited space in their workplaces. Access to raw materials, working conditions, marketing outlets and quality of labor force are among other problems cited by small entrepreneurs.

Even if they attribute specific importance to problems in the field of finance and credit, small entrepreneurs are aware that their present difficulties derive from a rather complex situation where various problems are interknitted. One problem, for example, is that of competing with big capital and larger firms, with large grocery stores to be more specific. They regard the advantage of big stores in procuring cheaper inputs and materials and their sales on credit cards as elements of unfair competition. Craftsmen complain that more advanced versions of their products now manufactured by large enterprises are attracting taking away their clients. At the same time, almost all small entrepreneurs have their complaints about the adverse outcomes of harsh competition among small producers. It is a common attitude in Diyarbakir to expect a big help hand from the State. What is expressed most frequently in this context is the wish that the State invests more in Diyarbakir and there is expectation that shortage in local demand can be overcome by State investments. Furthermore, some among small entrepreneurs worry that they may fall behind technological advances in their respective fields. These entrepreneurs attach specific importance to training, including their own training, and insist on the necessity of transferring new skills to Diyarbakir as well.

Prospects as to the future of specific lines of activity are determined by the nature of the trade, its environment, business possibilities, demand, conditions of competition and availability of capital. A rather low proportion (22 %) of small entrepreneurs think that their specific trade is promising for the future. This negative outlook is expressed mostly by the phrase “this job does not bring money.” They identify this problem as the shortage of demand, which derives from the low purchasing power of people for whom their goods and services are intended. Those who are most pessimistic about the future are mostly from low educational backgrounds.

The questionnaire included a specific question designed to explore ideas and attitudes towards the future and the question put to entrepreneurs was what kind of investment they would make if given 10 billion TL as a long term and low interest loan. The majority (70.9 %) of respondents stated that they would invest this sum in their present business. This response fully confirms to the finding that the most important bottleneck in the promotion of present businesses is the lack of adequate financial resources. In other words, small entrepreneurs think that their present businesses can be improved by investing more in them. The tendency to invest additional financial resources in present businesses is observed more among craftsmen. A minority among small enterprises opts for such passive and less productive endeavors as opening a shop, buying real estate or a car and investing in agriculture, which also do not require any specific skill.

Projects that target the promotion of employment and business opportunities in the informal sector can be first addressed on the basis of individual sectors.

A survey conducted by the TOBB (Union of Chambers and Stock Exchanges) focuses on the shortage in the supply of qualified labor and limited opportunities for education-training as serious setbacks for the economy of Diyarbakir. The same organization points out to the following priority measures to boost the economy of the province: creation of a favorable environment for investments; having agricultural output of the province processed locally; diversification and enrichment of consulting services; intensification of measures and interventions in the field of human resources development; accordance of priority to education-training; and improvement of transportation means and facilities.

As to individual sub-sectors, flourmills, hulled wheat production, bakery, cotton gin and yarn, wool and woolen products, animal products, milk products, leather processing, footwear and beverages come to the fore. Furthermore, textiles and garment, foodstuffs, tourism, chemical products, construction and metal goods are envisaged as sectors or branches that must be given priority. Also, manufacture of agricultural machinery and equipment, marble processing, chemical fertilizers, packing, construction materials and fruit-vegetable processing are regarded as promising branches in the short run. Emphasized for the medium term are the branches of vegetable oil production, footwear and plastic products. In the context of training qualified workforce for small and medium scale industries, branches assigned importance include cotton processing, greenhouse farming, tourism, agro-industries, auto repair and maintenance, construction and marble processing. In short, interventions designed to promote employment and business potential in the informal sector may give priority to these branches and sectors that seem to be promising.

A second approach may focus on areas specifically in the context of the shortage of qualified workforce. For example, during our interviews many people pointed out to the shortage of such personnel as secretaries, marketing and financing professionals. Also, many entrepreneurs underlined the importance of training marketing and sales personnel, accountants, managers, laboratory workers and quality specialists as well as mechanics, electricians and operators who would be needed more in manufacturing activities.

The third approach may be grasped in the context of the activities of two important organizations, which focus on vocational training and upgrading skills in workforce. One of them, the Apprenticeship Training Center (ATC) has its woodwork, electricity, hairdressing, engine operation, electronics and metal works workshops. The other, the MEKSA, established with the support of the German Government also gives applied training. These two organizations seem to have reached a considerable level of experience in terms of technical training. To further strengthen these organizations in their training services for qualified labor force and to contribute to their efforts for opening up new fields of expertise will actually be tantamount to the efficient utilization of available resources in the context of the project for promoting the informal sector.

When entrepreneurs are asked what lines of activity they find more lucrative and worth engaging in, five branches come to the fore. To put it in more definitive terms, about 40 % of small entrepreneurs give priority to 5 specific lines of activity. Ranked in order of preference, these five lines are as follows: Restaurant business (9.7 %), auto repair (7.8 %), ironworks, blacksmith trade (7.6 %), electrical works (7.4 %) and hairdressing (7.3 %). With the exception of restaurant business, the remaining four trades are among those where training and technological change/renovation requirements are rather high. Hence, reserving for the importance of other promising trades, these five trades may be given priority in the context of training support.

A considerable part of small entrepreneurs (48.2 %) state that they have no need for technical assistance. This need is emphasized more by craftsmen. Taken as a whole, it appears that specific groups assign relatively more importance to technical assistance-support than others. These groups include the following: Those who have undergone a process of vocational training or others who have had relatively long period of training; craftsmen who presently benefit from the technical information and skill of other masters; those who obtain technical information from such sources as fairs, business tours and written materials; craftsmen who use machinery and technical instruments more intensively; those who employ others in their workplaces; particularly craftsmen who have an employee with a master trainer certificate; and others who state that they receive help from their colleagues rather than their relatives. Differing from elders who seem to be disinterested and also from street vendors among whom young people are observed more, small entrepreneurs of the age interval 26-40 constitute the section most interested in training.

A general conclusion we can draw from the findings outlined above is that such factors as being engaged in material production, involvement in technology and possession of some skills make the need for technical information and support more keenly felt. This means that a specific level of technology calls for still higher levels of technical information-skill while others not possessing this accumulation and experience assign less importance to technical information and support.

A half of those asking for technical assistance give priority to training in use and operation of various machinery and devices. Considering that the second preference (by 31 % of respondents) is for information on new machinery, it can be concluded that the major focus is on the follow up and adoption of new technologies. This emphasis on training and follow up is only natural since many new instruments and machinery are rather complex and they require more sophisticated information in their operation. Here, keeping in pace with newly emerging technologies and mastering their upkeep and repair come to the fore as an important issue. The sections who emphasize their need to learn about and adopt new machinery (technology) include the following: Those engaged in the same trade for more than ten years; those coming from apprenticeship; those having relatively longer years of vocational training; those engaged in exchange of technical information with other master craftsmen; those who use more instruments and machinery in their workplaces; especially those employing 2 to 4 workers; those recruiting workers other than their family members and relatives; those who maintain their workers for longer time; those having employees with master trainer certificate; those employing apprentices; those who would invest any extra resource in their present business; those who are registered to trade chambers; and those engaged in mutual support and help with others in their trade including sharing of work tools and machinery.

The one-third segment composed of those emphasizing the need for training includes preferences for technical or general training together. For example, street vendors mostly opt for general training. While shopkeepers underline the need for general training and training in marketing, craftsmen give clear priority to technical training. Financing and marketing are two distinct areas in which training and consulting services are much wanted. Here, training programs designed to inform small entrepreneurs about existing credit facilities, procedures for access to credit, new products and new markets may be considered relevant and useful.

As far as training and consulting services are concerned, the target group or beneficiaries consist of younger entrepreneurs who are of urban origin or urbanized and having a secondary level of education. The objective of the training program covering this section should be to introduce new technologies and management techniques as well as to train people for new business lines. Another important finding to be considered here is that small entrepreneurs who employ workers and who have introduced some division of labor in their workplaces are more open to novelties in the fields of technology, organization and management.

Besides training programs designed to impart occupational information, skills and experience to small entrepreneurs and people working in small enterprises, the project for promoting employment and business potential in the informal sector can also be addressed in the context of projects developed to improve the effectiveness and efficiency of organizations and agencies extending services to such enterprises. The objective here is to improve the efficiency of existing infrastructure by promoting organizations and agencies providing training and/or consulting services to small enterprises in the informal sector together with their employees and by ensuring coordination among such organizations and agencies. Efforts to develop communication models to effect information flow in the school-family-workplace triangle may be considered in this context. Thought may also be given to the development of organizational models that will ensure the faster dissemination and sharing of already existing information base. Similarly, efforts may be waged to update existing training materials and make such materials more easily followed and adopted. Furthermore, models may be developed to restructure existing training institutions. And most important of all, projects may be developed to create, strengthen, improve and coordinate the activities of various organizations. This will involve the creation of new organizations as well as giving functionality to such organizations as the İÜEM (Training Centers for Enterprises), MEDD (Consultancy for Vocational Training), İDGD (Enterprise Inspection and Working Groups) and METEM (Vocational Training and Technology Centers) that already exist.