How Much Will the Minimum Wage Increase Be?

How Much Will the Minimum Wage Increase Be?
How Much Will the Minimum Wage Increase Be?

Vedat Bilgin, Minister of Labor and Social Security, chaired the Minimum Wage Determination Commission Meeting hosted by the Ministry of Labor and Social Security.

The Minimum Wage Determination Commission, consisting of workers, employers and government representatives, convened to determine the increase to be made in the minimum wage in the second half of 2022. At the meeting in the Reşat Moralı Hall of the Ministry, Ergün Atalay, Chairman of the Confederation of Turkish Trade Unions (TÜRK-İŞ) for the workers sector, and Özgür Burak Akkol, Chairman of the Board of the Confederation of Turkish Employers' Unions (TİSK) for the employers sector, also attended the meeting.

Speaking at the meeting, Bilgin continued by saying, "As the problems we face are reflected on the workers, it is necessary to hold a meeting about the minimum wage."

“Turkey had signed a historical minimum wage agreement at the end of last December. All employees, whether minimum wage or not, were satisfied. When the minimum wage is determined in a workplace, there is a hierarchical structure for those who work above the minimum wage, where they feel obliged to increase their wages. Employers have to make this adjustment, we should see here that the minimum wage has no limited effect. Today we faced a big problem after the pandemic. Not only Turkey but the world faced a big problem. First of all, the breaking of commodity chains, the breaking of transportation chains, the lack of commodities took shape as serious problems in production structures. This had more reflections on Turkey. When we consider the negative impact of fluctuations in foreign exchange prices on the economy, it is possible to see the real causes of inflation more objectively. Turkey is also fighting resolutely on ways out of inflation, but regulation of energy resources is not something we can do with our own will. The problems we face during these processes lead to new problems outside of our administration. However, despite everything, we must proceed with determined steps towards the solution of this problem. The first is the growth of Turkey. It was announced recently that 7.3 percent growth in the first quarter shows that Turkey's production power has increased and continues to increase. This is one of the most important sources of our confidence in the future. Another is that this growth is a growth that is directly based on exports and industrial production. Our strength in this production shows the resources of looking at Turkey in a healthy window in order to overcome these problems in the future. All these show us that there is inflation, but we will overcome inflation by producing, and we will overcome it by exporting. We can generate foreign exchange, this is our source of trust. It is also our source of hope for the future. Another problem is: This problem is experienced in many countries of the world, fighting inflation in production makes us look to the future with hope, but some countries experience inflation in stagnation, not in production. Thank God, Turkey is far from this and it is a country that has the means to solve and overcome this problem by producing.”

“We Have to Take Social State Measures to Protect Our Workers”

Noting that the issue that should be emphasized in the minimum wage meeting is the distorting effect of inflation on income distribution, Bilgin said, “There are two mechanisms that regulate income distribution; One is the competitive market environment and the other is the social policies of the welfare state. The first effect that disrupts the income distribution is resolved by the competitive market environment, with the effect of regulating the competition between various sectors, that is, we can see the income distribution and the regulatory results of the market with the competitive market effect between different income groups. Since the employees cannot regulate their own incomes in the face of inflation, the social state should intervene there. Today, it stands before us as an institutional regulation opportunity that fulfills these functions at minimum wage. We have to put into effect social state measures to protect our employees, our workers, who are the most important basis of Turkey's production power. The statements we made as the Ministry were that the minimum wage should always be collected in a normal period. In today's environment, it is our duty to protect our employees against the destruction of inflation and we have to do this. The most important tool we have in this regard is the re-determination of the minimum wage. The minimum wage is not limited to our approximately 6-odd million workers who are covered by the minimum wage. It is a factor that will have a positive effect on the wages of the income groups above them," he said.

“I hope that the work of the commission will be concluded tomorrow”

Pointing out that the 13 percent level of organization in Turkey is a serious problem, Minister Bilgin said, “When Turkey's workers are not organized and have no other means other than the minimum wage, wages are stuck at the minimum wage level. In order for this to happen, we need to pave the way for the organization. We have previously shared with the press the efforts to remove the obstacles related to unionization that make it difficult to organize at the legal level. We will make the regulations in this legislation, we will overcome the legal obstacles or the negative attitude against organizing that some businesses and employers put forward as a legal reason. We are the Ministry of Labor, first of all, we have to protect our workers and social peace. For this, we must first destroy the mentality that restricts freedom of association. We need to overcome the legal problems. We will walk with determination on this issue. I hope that the commission work that we started today will be concluded tomorrow. We will not only be able to overcome the negative effects of this regulation in favor of the workers against the negative effect on the income distribution in Turkey. At the same time, we will find the opportunity to make a social transfer," he said.

“We Will Eliminate the Pressure of Inflation on Workers”

Minister Bilgin said that the state's interventions in income distribution with social policies actually mean a social transfer in favor of the workers and said, “Today, the Turkish industry is increasing a thousand large organizations in their activities, this is important, but they have to share these profits with our employees. Turkey cannot continue to grow without providing social peace in production. It is not possible to grow without producing. We will grow in social peace, by sharing. With this conjuncture, we will eliminate the negative effects of economic fluctuations and the pressure of inflation on the workers. I hope we get a healthy result that satisfies our employees and Turkey. I wish this meeting to give good results to our nation in advance," he said.

“TİSK Will Put Its Hands Under The Stone”

TİSK Chairman Özgür Burak Akkol wished that the process would be beneficial for both the employees and the employers and said, “The minimum wage is determined annually, but our citizens have expectations. With the agreement of both the workers' side, our state, and our businesses, we agreed that there was a need for an interim raise, and we came here willingly. We, as TİSK, are here with full agreement to meet the expectations of our citizens due to the current conjuncture. On the one hand, commodity prices, energy prices, there is a war right next to us, there is a war in our region. Our citizens are affected, the same uncertainties affect our businesses, business owners and companies. Therefore, TİSK will again take the responsibility in determining a balanced minimum wage.”

Akkol said, "Some of the things that have been talked about for 20-30 years in our last meeting came to life" and said:

“One of them was given a very nice raise. A 50 percent net wage hike was made above inflation. The second is at least as valuable as the first; This commission implemented the non-taxation of the minimum wage, which has been talked about for many years. The minimum wage is not taxed, and it is an output of this commission that all employees are not taxed as much as the minimum wage. It has been a good agreement. Our last meeting was completed with triple alignment. In the same way, I hope that there will be a balanced process that protects our valuable employees, 3 million people, and our exporting enterprises, which provide employment without making any big or small discrimination, and that we will agree on a balanced figure. I wish you good luck in this process.”

Türk-İş Chairman Ergün Atalay stated that for the first time in many years, a meeting was held about the minimum wage towards the end of June and said, “Unfortunately, the increase we received in January for the last 5 months, unfortunately, melted down after 3 months, especially due to high inflation in food. Low and fixed income, retired, minimum wage workers are the segments of society that suffer the most in this country. I know that there is a war, a disease called covid still continues, but people are in economic distress in a way that has not been seen in recent years. I hope that there will be an arrangement that will make the public, the minimum wage, the low and fixed income people breathe within the framework of the inflation. It is in our request. In particular, you are making an effort to unionize, but we have not achieved any results so far. There are 500 most important companies in Turkey, we are organized in 100 of them. We have an expectation; legislation is needed. Retirees have expectations, EYT members have expectations. There are expectations of the subcontractor workers regarding these. If we get a good result after this meeting and complete these issues within this year, both the public and me and the worker will be satisfied.

The minimum wage, which was applied as gross 2021 liras and net 3 thousand 577 liras in 2, was determined to be gross 825 thousand 50 lira and net 2022 thousand 5 lira for 4, with an increase of 4 percent.

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