Turkey Hikes Minimum Wage by 22%, Far Short of Labor Demands

(Bloomberg) -- Turkey’s minimum wage will rise 22% next year, challenging efforts to keep down inflation while dismaying unions that found it insufficient to address the economic hardships caused by the coronavirus.

The monthly net minimum wage will be 2,826 liras ($377), Labor Minister Zehra Zumrut Selcuk said in Ankara on Monday. About half of all workers in the country of 83 million people earn a monthly salary at or near minimum wage, according to a study by labor confederation DISK.

“Considering the loss of incomes due to the pandemic, the new minimum wage had become even more important for employees,” said Arzu Cerkezoglu, the DISK chairwoman. “We had demanded a monthly level of 3,800 liras. The figure that was announced is unacceptable,” she said by phone.

Turkey’s largest labor confederation, Turk-Is, which represented workers at the wage negotiations, called the increase “inadequate.” But unions had no immediate plans to combat the government’s decision.

Any increase above 20% would be “a big challenge” for the central bank in its fight against inflation, said Mike Harris, the founder of Cribstone Strategic Macro, a London-based consultancy.

“The minimum wage in Turkey is about as close to a national wage policy as you will find in any country -- hence a much bigger driver of inflation than lending growth and arguably even the currency,” Harris said by email, before Monday’s announcement.

Consumer prices rose an annual 14% in November, and analysts estimate the increases to gain pace in December. The central bank’s year-end inflation estimate is 12.1%, more than double its annual 5% target.

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