Gov’t to propose TL 1,300 as minimum wage in Turkey, says former labor minister Çelik

Published 11.11.2015 12:52
Updated 11.11.2015 16:09

Former Ministry of Labor and Social Security Minister Faruk Çelik made a statement about the proposed changes to the minimum wage, saying, "The minimum wage determination commission will gather on Dec. 1, and the recommendation of the government will be given." Moreover, Çelik gave a precise date for a minimum wage hike saying, "The minimum wage rate will be TL1,300 ($446) from Jan. 1 onwards."

Prior to the Nov.1 election, the ruling Justice and Development party (AK Party), which won enough seats in Parliament to form a single-party government, promised to raise the minimum wage from TL 1,000 to TL1,300 per month.

Currently, around 5 million people work for minimum wage. Businesses have signed collective bargaining agreements to establish "base wage" negotiations according to the current minimum wage level. Indicating that this raise is big enough to affect the economy, S&P credit analyst Aarti Sakhuja said: "If you look at the prospective reforms, for example, increasing the minimum wage, incentivizing household savings and reforms related to the participation of women in labor market, these all have a supply side effect, thus increasing Turkish economic growth. And, at the same time, such reforms can move the economy away from the dependence on external financing to more organic financing, generating income. If these are indeed implemented, we would see this as a credit positive."

Moreover, the burden of such a minimum wage hike on the economy is greatly questioned. Therefore, the government will examine the effects of the increase in the minimum wage on Jan. 1, 2016. Granting incentives for traditional sectors with low competitive power and low added value are also on the agenda. Economic burdens, especially the ones facing labor-intensive sectors such as garments, textiles and furniture, will be relieved. Tax exemptions will also be taken into consideration. The cancellation of the stamp duty, which is currently TL 12, for each minimum wage earner will cost the government TL 60 million.

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