New Year's gift for Turkish workers: 30 pct increase to minimum wage
The Minimum Wage Determination Commission will hold its final meeting in 2015 to implement the new minimum wage scheme at the start of the New Year. All attention is being focused on how the 30 percent increase will be financed and how the burden will be shared between employers and the government.
The government has taken the first step to ease the costs on employers. With the implementation of a Cabinet decree, the premium support provided to employers until Dec. 31 for each male employee between the ages of 18 and 29 and for female employees over 18 in order to increase the labor force participation rate of women has been extended for the next five years - applicable to each employee recruited until the end of 2020. A total of 20.5 percent of the insurance premiums will be covered by the Unemployment Fund in order to support new employment opportunities, improve the competence of employees and protect them against unemployment - provided that the employees fulfill the required conditions.
The suggestions, including the exclusion of minimum wage from tax and providing subsistence allowance over the highest limit for all employees, were not welcomed by the Finance and Social Security Institutions, as the Institution noted that such changes mean a drop in tax income and can trigger unregistered employment. After these views were exchanged, the premium incentive option agreed upon includes increasing the 5 percent incentive by 2 percent.
Labor and Social Security Minister Süleyman Soylu welcomed a committee presided over by Confederation of Progressive Trade Unions (DİSK) President Kani Beko. Soylu stressed that the new minimum wage will be determined until Dec. 31, and said the new minimum wage, totaling TL 1,300 ($446), is not the subsistence wage but the social base pay, and that all sides agree that it should be increased.
When last year's minimum wage increase and the increases in public servant wages are considered, the minimum wage for 2016 was estimated at TL 1,120 to TL 1,130; therefore, the difference means additional burdens for employers. Soylu reminded that Prime Minister Ahmet Davutoğlu had previously announced that this burden can be shared. "This year will be a year of reforms and growth. We are obliged to ensure that entrepreneurs can act in confidence. Therefore, we will be implementing a series of incentives and taking various steps," Soylu said, and added that the arrangement to increase monthly pensions by TL 100 has been legally completed.
Beko said they are pleased with the increase in the minimum wage, and the additional costs should be covered by fair tax incentives or exemptions instead of support for insurance premiums and the unemployment fund. Beko added that problems regarding severance pay can be resolved by adding the expression "wage guarantee fund" to the codes.
The fines for employing unregistered workers employers will be subjected to are increasing as well. For each employee who worked for one year in the same business without being registered to the social security system, the employer will have to pay approximately TL 50,000 - totaling 38 monthly minimum wage payments - plus all incentive premiums will be cancelled.
The government has taken the first step to ease the costs on employers. With the implementation of a Cabinet decree, the premium support provided to employers until Dec. 31 for each male employee between the ages of 18 and 29 and for female employees over 18 in order to increase the labor force participation rate of women has been extended for the next five years - applicable to each employee recruited until the end of 2020. A total of 20.5 percent of the insurance premiums will be covered by the Unemployment Fund in order to support new employment opportunities, improve the competence of employees and protect them against unemployment - provided that the employees fulfill the required conditions.
The suggestions, including the exclusion of minimum wage from tax and providing subsistence allowance over the highest limit for all employees, were not welcomed by the Finance and Social Security Institutions, as the Institution noted that such changes mean a drop in tax income and can trigger unregistered employment. After these views were exchanged, the premium incentive option agreed upon includes increasing the 5 percent incentive by 2 percent.
Labor and Social Security Minister Süleyman Soylu welcomed a committee presided over by Confederation of Progressive Trade Unions (DİSK) President Kani Beko. Soylu stressed that the new minimum wage will be determined until Dec. 31, and said the new minimum wage, totaling TL 1,300 ($446), is not the subsistence wage but the social base pay, and that all sides agree that it should be increased.
When last year's minimum wage increase and the increases in public servant wages are considered, the minimum wage for 2016 was estimated at TL 1,120 to TL 1,130; therefore, the difference means additional burdens for employers. Soylu reminded that Prime Minister Ahmet Davutoğlu had previously announced that this burden can be shared. "This year will be a year of reforms and growth. We are obliged to ensure that entrepreneurs can act in confidence. Therefore, we will be implementing a series of incentives and taking various steps," Soylu said, and added that the arrangement to increase monthly pensions by TL 100 has been legally completed.
Beko said they are pleased with the increase in the minimum wage, and the additional costs should be covered by fair tax incentives or exemptions instead of support for insurance premiums and the unemployment fund. Beko added that problems regarding severance pay can be resolved by adding the expression "wage guarantee fund" to the codes.
The fines for employing unregistered workers employers will be subjected to are increasing as well. For each employee who worked for one year in the same business without being registered to the social security system, the employer will have to pay approximately TL 50,000 - totaling 38 monthly minimum wage payments - plus all incentive premiums will be cancelled.