"Turkey to Raise Minimum Wage by 49% Next Year"…Bold Policy Announced Ahead of Election

Two Annual Hikes in the Past Two Years Due to In플플레이션
Criticism Arises That Policies Ahead of Next Year's Election Aim to Win Votes

Turkey has decided to raise the minimum wage by 49% next year compared to this year. Critics argue that this is a populist policy aimed at appeasing public sentiment suffering from high inflation and economic crisis ahead of the upcoming local elections. On the 27th (local time), foreign media such as the Financial Times (FT) and Reuters reported that the Turkish Ministry of Labor announced the minimum wage increase for next year.

This is 49% higher than the minimum wage that was additionally raised last June. Compared to the beginning of this year, the increase rate reaches 100%. The Turkish government explained that this increase is also a measure considering inflation. Vedat I?ıkhan, the Turkish Minister of Labor, said at a press conference held in Ankara, "We have kept our promise to ensure that workers are not crushed by inflation," and announced, "The minimum wage next year will be raised to 17,002 lira (approximately 740,000 KRW)."

President Recep Tayyip Erdogan of Turkey. [Photo by AP·Yonhap News]

This decision comes ahead of Turkey's local elections in March next year. President Erdo?an's adherence to low-interest-rate policies caused Turkey's inflation rate to surge to 85.51% in October last year. The inflation rate still remains in the 60% range. The value of the lira has fallen by 35% this year, increasing the financial hardship of the people. Turkey's inflation is at its highest level in 25 years, weakening the purchasing power of its citizens accordingly. Ultimately, with local elections approaching, the Turkish government has no choice but to use minimum wage increase policies to gain even a single vote for re-election. About one-third of Turkey's population of approximately 86 million receives wages at the minimum wage level.

However, the financial market has expressed negative views on the scale of the Turkish government's minimum wage increase. There are concerns that the sharp wage increase could further fuel the already severe inflation. Some critics also argue that this is a populist policy aimed at gaining votes ahead of next year's local elections. A U.S. Wall Street investment bank predicted that the wage increase would lead the Turkish Central Bank to implement strong monetary tightening. Since June, when the Turkish Central Bank raised the benchmark interest rate for the first time in two years and three months, it has increased the rate from about 8.5% to recently 42.5%. Morgan Stanley explained, "If the minimum wage increase rate exceeds 40-50%, the Central Bank will raise interest rates more than expected."

This content was produced with the assistance of AI translation services.