BY DR. BURCU AYDIN OZUDOGRU
The results of the impact of the economic policies implemented in the last five years were similar to the “base equalization” policy. The base equalization policy does not mean a decline in income inequality. It means that a substantial group of society is in the low-income group due to the decrease in the middle-income group.
Inflation is the most important reason for this. It rapidly reduces the expandable income and paves the way for a decrease in the middle-income group and densification of the population in the low-income groups. Three out of 10 people are poor, according to TurkStat. The reference period of this survey is 2021. So, poverty was higher due to the record-high inflation in 2022.
The education system also triggers unskilled employment and low income. Turkish students’ success in mathematics, science, and reading ranked 31st among 37 OECD countries in 2018, according to PISA.
The rigidity in the labor force, problems in the pension system, and wage policies also limit qualified employment hikes. With social security premiums, Turkey is among the countries with the highest premium burden in OECD. The highest informal employment and understatement are also in Turkey. The wage hikes, which aren’t based on efficiency increases, reduced the real wage. A full-time worker earned only 29% above the minimum wage in 2021. Turkey is the fourth country with the worst income in OECD in 2021.
The tax system, which is based on indirect taxes, is among the important factors deteriorating the expandable income of the middle-income group. Residential expenses place a burden to 75% of the population, 65% of the population can’t renew their old furniture, and 60% of people cannot take a vacation away from home for one week, according to TurkStat data, of which the reference year is 2021.
All these policies will result in the qualified labor force rapidly moving abroad, the new generation heading towards low labor and non-tax jobs, and the qualified labor force infrastructure to further deteriorate.
