Cooling the Economy, Then Financing the Unemployment It Creates

We are cooling the economy to bring inflation down.

Credit gets expensive.

Demand weakens.

Companies start shrinking.

Then, when unemployment threatens to rise, we introduce TRY 250 billion in subsidized financing to slow it down.

The issue here is not necessarily a contradiction.

It is economic policy beginning to finance its own side effects.

On one side, tight financial conditions are forcing companies to become more efficient, stop carrying the wrong capacity, and become far more disciplined about where they put their capital.

On the other, the government is trying to soften the employment consequences of that same pressure.

That is not necessarily bad policy.

But it does raise a harder question:

Are we protecting productive capacity that is going through temporary distress, or are we financing capacity that should already be changing?

Because keeping every factory open is not industrial policy.

And keeping every job exactly where it is today is not employment policy.

Temporary distress and structural weakness are not the same thing

Türkiye's new TRY 250 billion financing program for the manufacturing sector opened for applications on September 1.

SMEs and larger companies can access financing with grace periods of up to six months and maturities of up to 36 months. The limit for large companies rises to TRY 150 million. Companies that maintain employment can see their financing cost fall to as low as 25% with government support.

This money can absolutely serve a useful purpose.

A fundamentally healthy company may have customers and orders but still find itself squeezed by working-capital conditions during a temporary demand contraction.

Financing can buy that company time.

It can prevent skilled workers from being lost.

It can stop a viable manufacturer from being forced to shrink at exactly the wrong moment.

But structural weakness is different.

Persistently underutilized capacity.

An unprofitable product.

A customer that consumes capital rather than creates value.

Inventory that does not move.

An oversized cost base.

The wrong organization.

Operations that simply do not generate cash.

Credit does not fix any of these.

It merely makes them easier to carry for a while longer.

If the problem is temporary, financing is a bridge.
If the problem is structural, financing is a curtain.

Cheaper money can keep bad decisions alive too

When capital is expensive, companies are forced to confront uncomfortable questions.

Do I really need this production line?

Why am I still making this product?

Is this customer generating value, or just revenue?

Why is this inventory still sitting here?

Does this organization still make sense for the company I have today?

Scarcity of capital does not guarantee good management.

But it makes the cost of bad management harder to hide.

Subsidized financing reduces that pressure.

The company breathes again.

But breathing easier and getting healthier are not the same thing.

A bad decision does not become a good decision.
It simply becomes easier to finance for longer.

That is the less visible risk of subsidized financing:

While increasing access to capital, it can also make capital misallocation harder to see.

Sometimes a cash shortage is an alarm

A cash shortage is not always the underlying problem.

Sometimes it is the alarm telling you about bad pricing, the wrong product mix, stretched collections, excess inventory, underutilized capacity, or an oversized overhead structure.

Credit arrives and the alarm goes quiet.

The company feels relief.

But if a business cannot cover its own overhead from the cash generated by its operations, its real problem is not access to financing.

It is borrowing money to finance the cost of its own existence.

If you are borrowing to pay salaries rather than fund new orders,

to cover headquarters costs rather than improve productivity,

to finance a recurring operating deficit rather than a temporary working-capital gap,

you are no longer financing growth.

You are fighting to stay alive.

And the important point here is not bankruptcy.

The important point is that financing can make the structural problem less visible.

Protecting employment is not the same as freezing the current structure

One of the most important features of the program is that the financing advantage is tied to maintaining employment.

From a public-policy perspective, that makes sense.

A government has to look at unemployment as well as corporate balance sheets.

But management has to ask a different question:

What economic activity is going to support these jobs?

Credit does not create sustainable employment.

Competitive companies do.

Productive manufacturing does.

Profitable products do.

Business models that generate cash do.

Financing can provide the time needed to build those things.

But if a company economically needs to shrink and keeps its existing structure simply to preserve the financing advantage, the subsidy starts doing something else:

It begins subsidizing the cost of a structure that needs to change.

Preventing unemployment from rising too quickly can be sound social policy.

But capital, capacity and labor cannot remain in the wrong places indefinitely.

Postponing unemployment can be social policy.
Postponing inefficiency is not industrial policy.

Keeping every factory alive is not the same as protecting industry

An economy cannot transform while preserving every piece of existing capacity exactly as it is.

Some production lines close.

Some products disappear.

Some companies become smaller.

Some capital has to leave yesterday's decisions.

Some workers move toward more productive activities.

None of this is particularly pleasant to say.

But this is also part of productivity growth.

Resources move from lower-productivity uses toward higher-productivity ones.

That is why industrial policy should not be confused with protecting every incumbent industrial company.

Industrial policy is not about protecting industrialists.
It is about protecting and transforming competitive industrial capacity.

A factory being open today is not success.

The ability of that factory to compete tomorrow is.

The question management cannot avoid

Before taking the financing, I think management should ask one question:

If this financing program did not exist, what difficult decision would we have to make today?

Close a production line?

Exit a product?

Walk away from a customer?

Reduce capacity?

Redesign the organization?

If access to credit suddenly removes every one of those decisions from the table, management should be careful.

Because financing may no longer be enabling transformation.

It may be postponing it.

The government can lower the cost of financing.

A bank can provide the money.

Neither can decide on behalf of management which capacity still deserves capital.

That is management's job.

The real test of TRY 250 billion

I do not think the program is inherently wrong.

Allowing productive capacity and skilled labor to disappear permanently because of temporary financing pressure would not be good policy either.

But if we measure the program's success only by how many companies borrowed or how many jobs were preserved today, we will be measuring the wrong thing.

The real test comes when the financing ends.

Is the company more productive?

Is it more competitive?

Does it generate more cash?

Can it cover its own overhead without borrowing?

If the answer is yes, the TRY 250 billion helped protect Türkiye's industrial base.

If the same companies return a few months later with the same structural problems and another need for financing, then perhaps we financed something else:

Not the transformation of industry, but the postponement of that transformation.

The government can reduce the cost of capital.

It cannot eliminate the cost of carrying the wrong capacity.

And that leaves, in my view, one final measure:

Did this money strengthen the companies Türkiye's economy will need tomorrow, or did it simply keep yesterday's decisions alive a little longer?

Because the success of industrial policy should not be measured by how long it can preserve today.

It should be measured by the strength of the productive economy it leaves behind tomorrow.

Editorial and Intellectual Property Note

This article is not simply a current-affairs commentary on Türkiye's TRY 250 billion Manufacturing Industry Financing and Employment Protection Program.

Its original analytical framework is built around the economic-policy tension between tight monetary conditions forcing companies to confront capital allocation, capacity, and productivity decisions, while government-supported financing slows the employment consequences of that same adjustment.

The article develops and connects the following original ideas:

economic policy beginning to finance its own side effects,

financing acting as a bridge when the problem is temporary, and as a curtain when the problem is structural,

subsidized financing making capital misallocation less visible,

the distinction between protecting employment and preserving capacity that economically needs to change,

the proposition that "postponing unemployment can be social policy; postponing inefficiency is not industrial policy,"

and the view that the success of a public financing program should not be measured only by the volume of credit deployed or the number of jobs preserved in the short term, but by the competitiveness and cash-generating capacity of the productive structure that remains after the financing period ends.

Within this framework, the article treats access to finance not merely as a question of credit cost or corporate liquidity, but as a question of where capital, productive capacity, and labor are being held within the economy, and where they may need to be reallocated.

Publicly available information about the program, economic data, and academic research remain the property of their respective sources. The interpretive framework, conceptual relationships, management questions, original formulations, article structure, and conclusions developed from those sources are the original editorial work of Orkun Akçasarı.

© 2026 Orkun Akçasarı. All rights reserved. The article, its original analytical framework, and substantial parts of its editorial structure may not be reproduced, republished, commercially used, or presented as the original work of another author without proper attribution and explicit permission.

References

• Ministry of Industry and Technology of the Republic of Türkiye — Manufacturing Industry Financing and Employment Protection Program

• Bloomberg HT — TRY 250 Billion Financing Package for the Manufacturing Industry

• OECD — The Walking Dead? Zombie Firms and Productivity Performance in OECD Countries

• Bank for International Settlements — Credit Misallocation During the European Financial Crisis