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Turkey’s business circles welcome bold minimum wage hike

by DAILY SABAH

ISTANBUL Dec 17, 2021 - 3:25 pm GMT+3
A waiter wearing a protective face mask disinfects a table at a restaurant in Ankara, Turkey, Aug. 6, 2020. (AFP Photo)
A waiter wearing a protective face mask disinfects a table at a restaurant in Ankara, Turkey, Aug. 6, 2020. (AFP Photo)
by DAILY SABAH Dec 17, 2021 3:25 pm

Turkish business world representatives sided with the minimum wage hike decision for 2022, pointing out that the 50% hike has met expectations.

The country’s minimum wage has been increased by a massive 50% for 2022, President Recep Tayyip Erdoğan announced on Thursday, with the lifting of two taxes on the minimum wage.

Rifat Hisarcıklıoğlu, head of the Union of Chambers and Commodity Exchanges of Turkey (TOBB), said in a Twitter statement that they expect additional measures to be taken to protect the country's production power.

“It was also a positive decision that the part of the wages of all employees corresponding to the minimum wage was exempted from Income and Stamp Tax. We expect additional measures to be taken to protect the production power of our country,” he said.

Effective as of Jan. 1, the wage has been increased to TL 4,250 (around $275.40), Erdoğan told a televised address in the capital Ankara.

According to the country’s Social Security Institution (SGK), more than 40% of all workers in the country of around 84 million earn minimum wage.

Erdoğan also announced starting next year, the government will abolish both income and stamp tax on the minimum wage “to ease the burden of employers and remove possible effects on employment.”

Turkish Exporters Assembly (TIM) Chairperson Ismail Gülle said that the 50% increase in the minimum wage will relatively compensate employees’ losses against inflation.

“Meanwhile, the lifting of the income tax from the minimum wage and the stamp tax will relieve the cost burden on the employer. If there is no employer, there is no employee, and if there is no employee, there is no employer. With the decision taken, the interests of both stakeholders were taken into consideration. We wish good luck to our business world and our employees once again,” he said.

Turkey’s annual inflation increased to the highest level in three years in November, accelerating to 21.31%, up from 19.89% in October, according to the Turkish Statistical Institute (TurkStat).

Meanwhile, the end of the current year inflation expectation jumped to 23.9% in December from 19.3% in November, the latest Survey of Market Participants by the Central Bank of the Republic of Turkey (CBRT) showed.

Nail Olpak, head of the Foreign Economic Relations Board (DEIK), said about the recent decision that the people who suffer the most in the high inflation environment are wage workers and those who earn minimum wage among them.

“We consider this increased rate to be an extremely correct and important decision to provide economic relief to our employees working with minimum wage. The abolition of the income tax and stamp tax is actually an indicator of the value given to our employees who earn minimum wage, and in this way, the burden of the employer has been significantly reduced,” Olpak said.

Mahmut Asmalı, the newly elected chairperson of the Independent Industrialists and Businesspersons Association (MÜSIAD), one of the top business associations, also said that reducing the employer's burden by removing the Stamp and Income taxes is a pleasant decision for them as the business world representatives.

“Our opinion as MÜSIAD is that providing an additional positive privilege for minimum wage workers within the scope of the industrial sector will be an important step in increasing our employment and production capacity for manufacturing,” he said.

The Turkish Enterprise and Business Confederation (TÜRKONFED) said in a statement that it is not possible to predict what the inflation will be in 2022 and how the living conditions will change and that “it may be necessary to make adjustments in the minimum wage during the year.”

“Although income and stamp duty will not be collected, the tax burden above the minimum wage is still high. The removal of these taxes will directly reflect on the employee. In addition, the regional minimum wage application can also be discussed,” the confederation suggested.

Şekip Avdagiç, head of the Istanbul Chamber of Commerce (ITO), said the minimum wage increase will be beneficial to the employees and the business world.

“It is the basic principle of production and social peace that the working people are not oppressed by inflation and their labor is protected. Our government supported both workers and employers by abolishing the income tax and stamp tax taken from the minimum wage,” Avdagiç said.

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  • Last Update: Dec 17, 2021 4:53 pm
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