A guide to calculating losses for retirees planning to sue TURKSTAT

The inflation data announced by TURKSTAT does not reflect the reality. I believe these figures are intentionally reported incorrectly, causing a large segment of society, especially retirees, to become impoverished. Since TURKSTAT is an official state institution, this constitutes an "official robbery" carried out by the state. 

Retirement pensions, worker wages, civil servant salaries, unpaid agricultural support prices that remain only on paper, and many other price determinations are set according to the inflation measured by TURKSTAT. 

The state reports inflation at less than half of the reality in order to reduce budget deficits and lowers the pensions it pays to retirees, yet the budget deficit does not decrease; on the contrary, it increases. 

On Wednesday evening, August 5, I was a guest on the "Anında Manşet" program hosted by my dear journalist friend Tuncay Mollaveisoğlu on Tele 1. Seyfettin Çilesiz, a retired judge from the 7th Criminal Chamber of the Court of Cassation, also participated in the program. Çilesiz stated that he could not make ends meet and had suffered losses due to retirement pensions determined by taking into account the inflation data announced by TURKSTAT, and he demanded that TURKSTAT correct its inflation data. If this demand is not met within 30 days, he will sue TURKSTAT. The subject of the lawsuit and the actual inflation rate can be determined by an expert witness appointed by the court.

So, what is the real inflation in Turkey?

Apart from TURKSTAT, there is ENAG, which measures inflation in Turkey. ENAG is a board consisting of independent scientists, and it uses TURKSTAT's commodity basket and weights in its inflation measurement.

WHY IS ENAG INFLATION MORE REALISTIC? 

I trust the inflation announced by ENAG rather than TURKSTAT. As for the reason... Because I tested it and concluded that it is accurate. Here is how:

With the "Nas" (religious-based) interest rate policy in September 2021, uncontrollable distortions occurred in inflation, exchange rates, interest rates, asset prices, and consumer goods prices. Inflation spiraled out of control. After October 2021, life became so expensive for me that I set out to measure my own inflation. It is not that I do not trust ENAG, but because my consumption expenditures are different from the baskets of TURKSTAT and ENAG, I wanted to measure my own inflation. For example, I do not live in a rented house. I do not have rent expenses like in the TURKSTAT and ENAG baskets, but I have property tax, home insurance, and maintenance fee expenses for my home. I do not consume as much red meat as in the basket measuring Turkey, but I consume more fish, vegetables, and alcoholic beverages than the Turkish average. We consume an average of 80 liters of gasoline, 20 grams of black pepper, and 3 kilos of yogurt per month. I go to the barber every two months. While TURKSTAT and ENAG measure inflation with 415 items, I use an expenditure basket with nearly 300 items. The rates I have measured over the past 2.5 years go hand-in-hand with those announced by ENAG. Some months ENAG comes out higher than me, some months I do... But when we look at it annually, there is a 3-4 point difference between ENAG and me. The inflation announced by TURKSTAT is not even half of ours. Moreover, TURKSTAT does not disclose the prices of the items it measures for inflation. 

In this case, I do not just trust ENAG inflation. Since the inflation I measure with a different basket goes hand-in-hand with it, I personally vouch for ENAG inflation. I wish academics in the economics departments of many foundation universities would develop their own indices and measure various inflation rates instead of talking behind their hands.

INFLATION HAS INCREASED BY 1803 PERCENT IN 4.5 YEARS

In Wednesday's program, I compared the inflation measured by ENAG with the inflation measured by TURKSTAT since January 2020. I took the index value as 100 in January 2020 and brought it to the end of June 2024.

As a result of ENAG's 4.5-year inflation, 100 units in 2020 became 1903 in June 2024. That is, the cumulative inflation was 1803 percent. Prices have increased exactly 19 times. TURKSTAT's 100 units became 527; according to TURKSTAT, the cumulative inflation was supposedly 427 percent, and prices increased 5.3 times. 

In the program, retired judge Seyfettin Çilesiz said that everyone could file a lawsuit due to the losses they have suffered. I promised on the program that I would write down the inflation rate according to ENAG for each year from 2020 to June 2024 on the 12 PUNTO platform. After all, spoken words fly away, written words remain.

In January 2020, the lowest retirement pension was 1500 liras. After June 2024, it rose to 12,500 liras. That is, it increased exactly 8.3 times.

If you look at it according to TURKSTAT, our government has not let the retiree be crushed by inflation. According to TURKSTAT, since prices increased 5.3 times, the lowest retirement pension should have been 1500 x 5.3 = 7950 liras. But with the President's discretion, will, and instructions, it became 12,500 liras. 4,550 TL more...

However, according to real inflation, it should have increased 19 times. It should have been 1500 x 19 = 28,500 liras.

The 12,500 liras is only 44 percent of the 28,500 liras it should be. They have stolen 56 percent of the retiree's pension.

But there is also this fact. The lowest retirement pension should not have been less than the minimum wage. In January 2020, the minimum wage was 2325 TL. In this case, the retirement pension that should have been was 2325 x 19 = 44,175 liras. In this case, 12,500 liras is only 28 percent of the retirement pension that should be. They have stolen 72 percent of the retiree's pension.

Before changing the law in 2008, the lowest retirement pension was 40 percent above the minimum wage. In this case, the lowest retirement pension should have been 44,175 x 1.40 = 61,845 liras. The 12,500 liras given today is only 20 percent of this amount... They have stolen 80 percent of the retirement pension.

So, would the state have gone bankrupt if it had paid this much in retirement pensions? These data I found based on ENAG inflation are for the January 2020 retirement pension. 

So, while retirement pensions have been whittled down since 2008, has the state's budget been balanced or improved? If they said, "the state is going bankrupt, everyone should make sacrifices," then retirees could also make sacrifices in the final period of their lives.

No, the state's budget deficits have worsened even further. The splendor of the palace has increased, and cronies and companies close to the government have added wealth to their wealth.

Here are the data...

They changed the retirement pension calculation rates in 2008, and the lowest retirement pension was 47 percent above the minimum wage. At that time, the ratio of the budget deficit to national income was 1.8 percent.

When we look at 2020, the year ENAG started measuring inflation, retirement pensions had gone from 47 percent above the minimum wage to 35 percent below it. The ratio of the budget deficit to national income rose from 1.8 percent to 3.4 percent.     

In 2023, despite significantly reducing the purchasing power of retirees, the ratio of the budget deficit to national income did not decrease; it rose to a record level of 5.4 percent. However, this figure does not include the Treasury's KKM (FX-protected deposit) losses. Since they dumped the 818 billion lira loss onto the Central Bank, we would not be wrong to say that the ratio of the budget deficit to national income is actually 8.3 percent.

In 2008, when retirement pension calculation rates were changed, the share of retirees in the population was 12.6 percent. By the end of 2022, the number of retirees increased, and their share in the population rose to 16.3 percent. In contrast, the share of retirees in national income fell from 6.8 percent to 4.1 percent during the same period.

Payments made from the budget for retirees fell from 5.2 percent to 2.6 percent. But the share of the budget deficit in national income rose from 1.8 percent to 8.3 percent. The retiree has not only made sacrifices but has also become unable to keep up with the money for cronies and state expenditures. They have become increasingly impoverished.

These data also clearly show that the AKP government has taken the rights of the retiree and transferred them to other state expenditures and to enriching cronies.

Here are the TURKSTAT and ENAG inflation rates year by year since January 2020

TURKSTAT ENAG CUMULATIVE VALUE 100 LIRAS SHOULD HAVE

2020 14.6         36.7 136.7

2021 36.1         82.8 249.9

2022 64.3        137.5 593.5

2023 64.8        127.2 1348.4

2024 (6 months) 24.7 41.2 1903.9

If you retired in 2020 or earlier, your pension should have increased 19 times from January 2020 to June 2024

If you retired at the beginning of 2021, your pension should have increased 14 times from January 2021 to June 2024

If you retired at the beginning of 2022, your pension should have increased 6.6 times

If you retired at the beginning of 2023, your pension should have increased 3.2 times

If you retired at the beginning of 2024 and your pension has not increased by 41 percent, it means they have stolen from your salary through TURKSTAT's machinations.

Those thinking of suing TURKSTAT can calculate the retirement pension they should have received according to these ENAG inflation data starting from January 2020.

For example, the lowest retirement pension, which was 1500 TL in January 2020, should have been 19 times higher.

1500 x 19 = 28,500 TL... The pension received is 12,500 TL... It corresponds to only 44 percent of the salary that should be. The retirement pension we are talking about is the lowest retirement pension. It should be 40 percent above the minimum wage.

In January 2020, the minimum wage was 2325 TL, and 40 percent above it is 3255 TL. 

19 times higher is 3255 x 19 = 61,845 liras.

12500/61845 = 0.20. Only 20 percent of the retirement pension that should be is being paid, and 80 percent of the earned retirement pension is being evaporated by the state.

Those who receive a higher pension than the lowest retirement pension should multiply their salary by the coefficient corresponding to each year and compare it with the monthly amount they receive, and they can calculate how much the state has evaporated from their pensions.