The Turkish government announced Wednesday that the country’s minimum wage will increase by 49% next year. Since January, the new minimum wage is 17,002 Turkish lira net per month, or 520 euros net per month.
This is already the second increase in the minimum wage during the year. The first increase in the minimum wage occurred in the summer and the minimum wage in Turkey will more than double compared to a year ago, the Financial Times reports.
“We are pleased to announce that we have once again fulfilled our promise to protect our workers from inflation,” said Turkish Labor Minister Vedat Isikhan.
About a third of Turkey’s 86 million citizens earn the minimum wage, and other wages are often tied to the minimum wage as well.
The government’s decision will bring relief to low-income families, but could make the fight against inflation more difficult. The lira crisis that began in 2021 has led to a sharp decline in the value of Turkey’s national currency. In the last year alone, the lira’s exchange rate against the dollar has fallen by 35% and Turkish inflation has risen to its highest level in a quarter of a century.
In November, annual inflation therefore remained at the level of 62% and, according to the central bank’s forecasts, it will reach 70% in May next year. It is possible that the central bank will now have to raise interest rates even more, because raising the minimum wage can only accelerate inflation.
Turkey’s central bank has already raised the base interest rate from 8.5% in June to 42.5%. Turkish presidential elections took place in May and the head of the central bank changed in June. Turkish President Recep Tayyip Erdogan pressured the previous central bank governor to cut interest rates ahead of the election to boost economic growth shortly before the vote.
The current decision to suddenly increase the minimum wage is believed to be linked to Turkey’s local elections, which will be held on March 31. Erdogan’s conservative AKP party is trying to return to power in Turkey’s two largest cities, Istanbul and Ankara, which are currently led by the centre-left opposition party CHP. The Turkish government hopes voters will support the president’s party to improve their incomes.
At the same time, the government promised that the minimum wage will not be increased again before 2025, so after the local elections, a tightening of Turkey’s monetary and fiscal policy and a more active fight against inflation is expected.
2023-12-28 05:10:00
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