Turkey’s private sector starts new minimum wage calculations

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Turkey’s private sector has started to make calculations as to how the government’s pledged increase of the minimum wage will affect overheads.

The minimum wage is expected to be increased to 1,300 Turkish Liras per month by the beginning of the next year from the current 1,000 liras, in line with the Justice and Development Party’s (AKP) vow before the Nov. 1 election, in which it won enough seats to form a single-party government.

At present, around 5 million people in Turkey are minimum wage workers, while workplaces that sign collective bargaining agreements establish “base wage” negotiations according to the level of the minimum wage. 

The rise in the minimum wage will affect the next year’s collective bargaining, with the 30 percent rise in the net minimum wage meaning higher demands by employees and the higher figures in collective bargaining agreements.

The rise will also affect employees who are currently paid slightly over the minimum wage.

“Currently, an employee who works for 1,200 liras a month earns just over the minimum wage,” said a private company official who asked to remain anonymous.

“But when the minimum wage is raised, his wage will be under it, so we will have to pay an extra 300 liras a month in line with the increase,” the official added. 

He also referred to companies’ internal arrangements that will be affected by any minimum wage increase.

“In most places there is a formalized balance between the wages paid to the chiefs, foremen, senior workers and the wages paid to the minimum wage earners. In order to keep that balance, as of 2016 all wages will have to be increased at the beginning of 2016. If this is not done, there will be problems with workplace order and employees’ productivity. Also, some sectors that can compete in the global markets thanks to cheap labor may be negatively affected by the raises,” the official added.

The rise in the minimum wage will also have an effect on public sector workers, whose net wages are calculated with discounts based on the minimum wage. Many other issues, such as the payments in the universal health care system, are also determined based on the minimum wage, so will have to be adjusted with the impending increase.

A significant rise in the minimum wage was among the Nov. 1 snap election promises of all political parties, although AKP officials said before the June 7 election that such an increase would be impossible.

The main opposition Republican People’s Party (CHP) promised to raise the minimum wage to 1,500 liras a month, while Prime Minister Ahmet Davutoğlu on Nov. 4 vowed to honor his pledge to increase the minimum wage to 1,300 liras.

Former Deputy Prime Minister Ali Babacan noted earlier this week that the government did not have the authority to raise the minimum wage, but it would offer the raise to the panel responsible for such decisions.

The related panel brings together representatives of labor unions with government and state officials.