The business world believes that one of the opposition parties' promises before the upcoming general elections, increasing the minimum wage, might cause more burdens in terms of costs to employers. Representatives of the business world have indicated that wages are one of the main cost items in businesses, and increasing the minimum wage will push the costs shouldered by employers to increase, therefore, also affecting the employees.
According to the Republican People's Party's (CHP) manifesto, the income tax on the minimum wage will be eliminated, and as a result, it will be TL 1,500 ($560), while the Peoples' Democratic Party (HDP) promised to increase it to TL 1,800 also making it exempt from tax. The Nationalist Movement Party (MHP) also mentioned the minimum wage in its manifesto and said that the net minimum wage will be increased to the minimum living standard - TL 1,400. On the other hand, the ruling Justice and Development Party (AK Party) said that the net minimum wage has been increased by 415 percent to TL 949 during their governance and will be increased to over TL 1,000 in the second half of the year.
'These are populist promises'
Speaking to Anadolu Agency (AA), the chairman of Ankara Chamber of Commerce (ASO), Nurettin Özdebir said that such promises do not match up nor take into consideration the economic facts and conditions of Turkey. Underlining that the minimum wage in a country does not only determine how much the employees earn but is also a criteria for many economic calculations, Özdebir said increasing the minimum wage definitely means both increasing the cost burden on employers and also the spending costs of employees. Referring to such promises as populist promises, Özdebit also said that despite such promises not reflecting the truth, it is a positive thing for discussing economic matters during the election period.
According to the Central Bank of the Republic of Turkey's figures, 35 percent of employees in Turkey earn the minimum wage, and Özdebir said that increasing the minimum wage would mean just increasing this percentage. "What should be considered is how to eliminate any kind of obstacles and burdens on employment," added Özdebir. While the burden on employment is around 30 percent in EU countries, this figure is around 85 percent in Turkey. Özdebir said that while it is normal for employees to focus on how much they earn, taxes and burdens, such as the premiums paid to the Social Security Institution by employers, should also be taken into consideration. He also highlighted the importance of increasing employment in order to increase the welfare of employees, saying that higher employment costs would only discourage investors willing to create more employment.
'Such an increase might force employers to turn to unregistered employment'
The chairman of the Turkish Employers Association of Construction Industries (İNTES), Celal Koloğlu said that just like political party leaders, employers are willing to offer better living standards for their employees, but increasing the minimum wage would also push up the general wage level, thus increase costs for employers. "Therefore, employers may be forced to apply to unregistered employment or decrease the number of employees in their workplace," said Koloğlu.
He also underlined that the unionization rate is very low in Turkey, around 9.21 percent and therefore, any regulation that will push the costs of employers up would mean a decrease in the number of registered and union member employees. Koloğlu further added that instead, more investments with high employment potential should be initiated instead of using the current budget resources for increasing wages.
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