The minimum wage debate is climbing to the top of the agenda. Although the government has not yet made its intentions clear, it had previously promised that wage earners would not be crushed by inflation. As of October, post-July inflation was 29.1 percent. November and December inflation will be added to the revised minimum wage following the negotiations.
The Confederation of Turkish Trade Unions’ hunger line is TRY 14,000 and the poverty line is TRY 45,700 as of November. If the promise is held, the minimum wage increase may reach 40 percent. The current minimum wage in Turkey is TRY 11,402 since July 2023.
Negatively impacts competitive advantage
The employers’ side continues to argue that if they raise the minimum wage too high, it will push up other prices and negatively affect their competitive advantage. The workers’ side, on the other hand, insists that the wage is not even enough for a basic living.
In between these two discourses lies one of Turkey’s most important structural problems that is not often put on the agenda. And that is productivity. The productivity problem of Turkish firms is in fact a structural problem. Even in developed countries, SMEs are growing faster than their Turkish counterparts.
Even the business world itself speaks of the fact that many firms that should have gone bankrupt have been kept afloat by various means, wasting resources. Productivity statistics point to a similar situation. According to data from the Ministry of Industry and Technology, the value added per working person, which was 101.8 in 2009, could only reach 125.9 by the end of 2021. Moreover, it has fallen to the 80s in various years during these years.
Growing need to address inefficiency
It is clear that no steps will be taken to address this structural problem while the disinflation process continues. However, there is also a growing need for an initiative to address the lack of productivity, which is not counted among the structural problems but in reality is becoming more urgent every day.
When a step is taken in 2024 for the minimum wage that will not satisfy the masses but will facilitate the fight against inflation – which will mean that the cost will be passed on to the masses – the distribution of resources on the other side and the rapid solution of the productivity problem may come to the fore as a necessity in terms of reducing social risks.