Eyes turn to AKP’s 22.3 billion-lira economic pledges

Neşe Karanfil - Hacer Boyacıoğlu / ANKARA

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After the Justice and Development Party (AKP) secured an unexpected victory in Turkey’s Nov. 1 snap election, receiving enough parliamentary seats to form a single-party government for four years, eyes have turned to its economic pledges, which are estimated to require a budget of 22.3 billion Turkish Liras per year.

On Oct. 4, Prime Minister Ahmet Davutoğlu declared his promise to increase the minimum wage to 1,300 liras, which is estimated to cost 19.3 billion liras annually, while also announcing a 10-article package on Oct. 28 that will lead to additional spending of 3 billion liras.

A temporary budget will be initially prepared after the Davutoğlu forms his new cabinet. The 2016 budget draft has already been submitted to parliament, but it will not be able to come to the assembly due to the tight upcoming schedule. The government will therefore first form a temporary budget, which is expected to be valid for the first three months of 2016. At some point a law will be introduced to allow the government to use allowances for the temporary budget, while some regulations that were due to end in 2015 will also be included within the temporary budget.

Meetings over the minimum wage will start in December, after which a program will be prepared based on election pledges and the regulations for the first legal package will be brought to parliament. These promises will also be written into the medium-term program. 

Among the economic vows made by the AKP ahead of the election are as follows:

- The minimum wage will be raised to 1,300 liras from the current 1,000 liras. A commission that will start work this month will determine the new minimum wage by the beginning of 2016. If the minimum wage is increased to 1,300 liras, employers will have to pay an additional 439 liras (before tax) to each minimum wage earner every month. 

- The AKP promised to wipe out young people’s debt to the general health insurance system, while they will also be given two years to make their premium payments. Five million people have unpaid debts to the system, according to current data. Another promise targeting the youth vote was to give incentives of up to 50,000 liras to support those who want to start a new business.

- All pensioners will receive a 100-lira increase in their pensions on an equal basis. The AKP also promised to lift the social security support contribution from pensioners who continue to work - affecting around 550,000 people.

- A regulation on subcontractors in public institutions is expected, which will grant subcontractor workers in state institutions regular worker status.

- Davutoğlu also said in an election rally that his government would increase university student bursaries from 330 liras to 400 liras.

- In the first economic package, police officers’ wages will see an increase of between 240 and 580 liras.

- Privates completing their compulsory military service will receive a 100-lira monthly wage rather than the current 30 liras, while military students’ wages will increase from 40 liras to 400 liras.

- The salary paid to village and neighborhood headmen (muhtars) will increase from 950 liras to 1,300 liras. 

- No tax will be paid on animal feed and fertilizers.

- Self-employed shopkeepers and small business-owners will be offered loans of up to 30,000 liras, while their taxes up to 8,000 liras will be lifted.