Friday, March 1, 2024

Turkey raises minimum wage by 49% -Dlight News

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Turkey’s government has delivered another steep minimum wage rise amid a long-running cost of living crisis, complicating efforts to rein in chronic inflation but likely to resonate with voters before nationwide municipal elections next year.

The monthly minimum wage will be raised to a net TL17,002 ($578), per month in 2024, Vedat Işıkhan, labour minister, said at a press conference. That is double the rate at the start of this year and a 49 per cent increase from a mid-year adjustment.

“We are pleased to once again fulfil our pledge to prevent our workers from being crushed by inflation,” he said. About a third of the population of 86mn people earn the minimum wage, and other salary rises are determined by the base pay.

A currency crisis in late 2021 sparked Turkey’s worst inflation in a quarter century, and the lira continues to depreciate, losing some 35 per cent of its value against the dollar this year. The cost of food, utilities and rent have all skyrocketed, incurring pain for most Turkish households.

However, higher wages also strongly contribute to pushing up inflation, which reached 62 per cent last month. The central bank was only expecting a peak to be reached in May at 70 per cent, and it may now be forced to continue raising interest rates to cool demand.

The bank has lifted the benchmark interest rate by 34 percentage points since June after President Recep Tayyip Erdoğan was re-elected and appointed a new governor to undo his pre-election economic policies. He had forced the previous bank chief to cut interest rates to single digits to expand the $900bn economy during his election campaign.

In a concession to the fight against inflation, the government has ruled out another increase to the minimum wage before 2025.

Turks are due back at the polls on March 31 to vote for mayors across the country. Erdoğan has vowed to retake control of Istanbul, the biggest city, and the capital Ankara from the opposition, building on the momentum of his re-election earlier this year, when he began his third decade at the helm.

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