Both employers and employees held their breath for the new minimum wage to be determined. According to three different scenarios, the wage is estimated to be between TRY 15,900 and TRY 18,000.
The new minimum wage will be determined in four meetings until the end of the month. According to the main factors that will affect the wage level, according to three possible scenarios, the net wage will increase by 40-45 percent to around TRY 15,960-16,500, the public contribution will be increased or the net wage will be increased to TRY 17,500-18,000.
The Minimum Wage Determination Commission will hold its first meeting today. The wage level has become more critical than ever this year. The economic administration has started a debate by announcing that the wage should be in line with the target inflation rate. President Recep Tayyip Erdoğan, Minister of Labor and Social Security Vedat İsikhan and party spokespersons have promised that “workers should not be crushed under inflation”.
The workers’ and employers’ side have also signaled the process and level through various statements, although they did not specify a level. Of course, the Commission will carry out a study and the wishes of the parties and the attitude of the government and the Presidency will be decisive in this decision. There are estimates of the level of the wage depending on economic and social developments. Until the Commission makes its decision, some estimates are being made according to all scenarios of a speculative nature. All scenarios and possible wage levels according to these scenarios are as follows:
An increase by 40-45% up to TRY 15,960-16,500
This rate of increase will, of course, be subject to technical correction due to the impact of income tax, but a formula will be found that will allow the net wage to be hiked to TRY 15,960-16,500 with increases in the range of 40-45 percent. The tool to be used to achieve these rates will be public support or technical adjustments in income tax rates. While the 2024 target inflation rate is 33 percent in the Medium Term Plan, the Central Bank’s latest inflation report raised the forecast to 36 percent. Realized inflation since the last minimum wage adjustment in June has reached 33.64 percent. In December, in line with the general trend, the CPI increased by around 3 percent, bringing inflation after the June hike to 37.7 percent. This rate of increase also includes an element to support the ‘welfare share of around 5 percent’ argument. This scenario envisages a limited increase in the current support of TRY 500 and an increase in the income tax bracket slightly above the revaluation.
Increasing the public contribution
According to this intermediate scenario, it is envisaged that the minimum wage will be raised above TRY 16,500 and up to TRY 17,000 with the additional discount to be created by straining budgetary means. In this scenario, as in the first scenario, there will be a search for controlling the costs of employers, while remaining in line with inflation targets.
Net wage reaches TRY 17,500-18,000
Together with the 15 percent increase to be given to the salaries of civil servants and civil servant pensioners in August in accordance with the collective agreement and the difference that will arise from the possible 3 percent inflation increase in December (after deducting the 6 percent increase in July), the increase that should be given is approaching 50 percent.In the case of an increase close to these rates, the net minimum wage would need to be raised by 53.5-58 percent. This scenario envisages a continuation of increased public support. Another study converging to this scenario was conducted by economist Hakan Kara. According to the official inflation target, Hakan Kara calculated that in order to stay above the possible hunger limit in 2024, it would be necessary to rise above TRY 17,500.
Workers insist that TurkStat submit a report
At today’s meeting of the commission, 4 real minimum wage earners from the labor side will be present. In the commission, where the parties serve with 5 members each, until the third meeting when the official reports are received, each side makes statements and activities according to its own game plan. These statements are the main determinant of the decision, with the public side making statements and taking actions to influence public opinion.These statements and attitudes serve as data for the attitude of the public sector, which is the main determinant of the decision. The Commission receives reports from the Treasury-Finance, Hacettepe University and TurkStat. In the 2023 studies, TurkStat did not submit a report on the grounds that it did not calculate living conditions. The labor sector emphasizes its discomfort with this situation.
The third and fourth meetings are usually the time for negotiations or for the criticism of the “non-signatory” side. In the few cases of full agreement, the government’s influence on the parties is important. The final point is usually made by the President. The labor side insists that the rate of increase in this period be determined in 6-month tranches. Although silence prevails on the employer side, it is expected that sectors that export based on labor costs will be adversely affected and employment will come to the fore.
Expected increase of 50 percent
Human resources and management consultancy firm Mercer announced the results of the ‘2023 Wage and Benefits Survey’. According to the results of the wage survey, in which a total of 1,744 companies participated, the wage increase rate planned for 2024 is planned to be 50 percent. According to the results of the survey conducted with the participation of companies from different sectors, the sectors that showed the highest wage increase from the last quarter of 2022 to September 2023 were logistics with 115%, retail with 114% and energy with 108%. The business lines with the highest wage growth are supply chain, production and engineering.