Turkey starts minimum wage talks after incomes hit by inflation, lira's losses

Turkey’s government and employers will begin talks on the minimum wage for next year with labour unions.

The 15-member Minimum Wage Commission, which includes five representatives each from the government, employers and unions, will meet for the first time on Friday.

The minimum wage in Turkey is 2,943 liras per month ($377), or 2,324 liras per month after deductions.

Turkish Treasury and Finance Minister Lütfi Elvan said on Thursday that the government would work hard to minimise the impact of high inflation on the country’s citizens. Annual inflation climbed to 14 percent in November from 11.9 percent in October, the Turkish Statistical Institute said on Thursday, imposing further financial pressures on a population already hit hard by the COVID-19 pandemic.

Turkey agreed a 15 percent hike in the net minimum wage for 2020 in December last year, when inflation stood at 10.6 percent. The agreement came after the government lost control of Turkey’s largest cities of Istanbul and Ankara in local elections in 2019.

More than 7 million people in Turkey earn the minimum wage from a workforce of about 32 million.

As well as the erosive effects of inflation, a slump in the lira’s value against the dollar has hit disposable income this year and imparted political pressure on Turkish President Recep Tayyip Erdoğan’s government. The currency has dropped about 25 percent in 2020, rendering imported goods more expensive to purchase.

The net minimum wage, equivalent to $390 per month in January, is now worth $298 per month, or $3,576 per year.

In 2019, Turkey ranked 26th of the 32 countries of the Organisation of Economic Co-operation and Development (OECD) in terms of the minimum wage, below every European and Asian member of the institution.

A four-member family must spend 2,516 liras ($323) per month to pay for a healthy and balanced diet, the Confederation of Turkish Trade Unions (Türk-İş) said in a report last week. The labour union is among those taking part in the minimum wage talks.

The poverty line for a four-member family in Turkey, which includes money spent on items such as clothing, rent, utility bills, education and health, stands at 8,197 liras, Türk-İş said, more than three times the net minimum wage level.

Falling disposable income in Turkey has coincided with a resurgence in the COVID-19 pandemic. Turkey reported 32,381 daily cases of the coronavirus on Thursday. Infections are the fourth highest in the world after the United States, Brazil and India, which have much larger populations.

Millions of workers in Turkey have been put on unpaid leave or short working weeks since the pandemic first erupted in March, further pressuring household finances and strengthening the hand of employers negotiating salaries for new staff.

The official unemployment rate in Turkey stands at 13.2 percent but does not include those with an employment contract, but who are currently not working or getting paid.