Let's look at the worker and the retiree, not the acrobat

Last Wednesday evening, on the Anında Manşet program prepared and moderated by dear Tuncay Mollaveisoğlu on Tele 1, we explained the behind-the-scenes of recent events—money laundering, fraud centered on social media influencers and famous football figures, and loan sharking—in their simplest form, with the contributions of all participants.

We clearly demonstrated how the Turkish economy turns its gears through dirty money, what is happening in the world of dirty money, and that football players, despite appearing as victims due to their excessive greed for profit, were in fact engaging in loan sharking. If you missed it, you can watch the program replay on the Tele1 YouTube channel with the ease of a Sunday. In that program, we also said this: All of Turkey is talking about the evaporated money of football players, but it is not talking “in a loud voice” about the money stolen from workers and retirees, in particular, through inflation. As a society, we are looking at the acrobat but neglecting the majority.

We have reached December. We are in a period where the minimum wage, which employees will receive starting February 1, 2024, and which retirees will receive starting from January 20, is being discussed and is on the bargaining table.

I will not go back very far. For the last two years, the government has caused inflation to explode with its irrational and unscientific interest rate policy. The exploding inflation has caused the living standards of fixed and low-income earners (workers, farmers, retirees, civil servants) to decline in an unprecedented way. For the last two years, Turkey has been experiencing an unprecedented distribution crisis, and income is being transferred from low and fixed-income earners to the business world, which can adjust its own income, and to the state with unprecedented savagery. Despite the raises given to the minimum wage and pensions over the last two years, the purchasing power of workers and retirees for the past two years is only at half the level of January 2022. I analyzed this situation with figures and found the necessary minimum wage and lowest pension levels for 2024.

First of all, I have this prerequisite. Out of respect for the science of statistics, mathematics, and economics, I based my inflation calculations on the data of the independent economists' group ENAG, not TÜİK.

Now let's take a look at the table below.

PERIODS MINIMUM WAGE (TL) LOWEST PENSION (TL)

January 2022 4253 2500

July 2022 5500 3500

January 2023 8506 5500

July 2023 11402 7500

Two-year increase %168 %200

Two-Year Inflation (ENAG) % 424 

(Note: As of January 1, 2022 – October 31, 2023, ENAG's 22-month inflation is 385 percent. Assuming 4 percent inflation each month in November and December, my inflation expectation at the end of two years is 424 percent.)

As can be seen, the minimum wage has increased by 39.6 percent of inflation. Let's assume the cost of a good and service in a consumption basket in 2022 was 100 TL. A minimum wage earner could buy 42.5 of these baskets on January 1, 2022. With two years of 424 percent inflation, the cost of this basket rose to 524 TL. The minimum wage is also 11,402 TL. At the end of 2023, despite their raised salary, a minimum wage earner can buy 21.7 of the same baskets. In plain terms, the purchasing power of the minimum wage earner's current 11 thousand 400 liras only covers 51 percent of January 2022. 49 percent of the purchasing power has gone to capital gains and the state.

Let's look at retirees in the same way. While a person receiving the lowest pension could buy 25 of the same baskets with their 2500 lira salary in January 2022, they can now only buy 14.3 with their 7500 lira salary. The retiree with the lowest salary only covers 57 percent of what they could buy at the beginning of 2022. 43 percent of the income has been transferred to the state and capital through two years of savage inflation. Salaries have increased in appearance, but both the worker and the retiree have become poorer.

It is worth repeating. Especially for the last two years, income has been transferred in Turkey on an unprecedented scale from the poor, low and fixed-income earners to those who determine the price of the goods and services they produce and to the state. Just to compensate for the last two years, in light of these calculations, we can find the level that the minimum wage and pensions should be at the end of 2023 as follows.

January 2022 minimum wage + (Minimum wage * Inflation rate)

(4253) + (4253 * 4.24) = 4253 + 18032 = 22,285 TL

With 22 thousand 285 liras, we will actually only have returned to the conditions of January 2022. Now we need to talk about what the 2024 minimum wage will be based on this figure. For this, we have two pieces of data. The first is the Revaluation Rate that the state will apply this year... In 2024, the state will increase many fees and fines, from driver's licenses to passports, from traffic fines to environmental fines, by the Revaluation Rate (58.4 percent). In this case, the minimum wage should be 22285 * 1.584. This makes 35 thousand 299 TL.

If you think that is too much, the second raise rate to be made a subject of bargaining, again after bringing the end of 2023 to 22 thousand 285 liras, let's calculate it this time by adding the 2024 inflation expectation, as suggested by Mehmet Şimşek, and the growth rate that the government boasts about so much. The Central Bank's 2024 inflation expectation is 36 percent... This year's growth rate is expected to increase by around 4 percent. In this case, the minimum wage needs to be 22285 * 1.36 * 1.04 = 31,520 TL.

This is a level I found entirely from ENAG inflation calculations. If we say, “What is the need for so many calculations? Both DİSK and TÜRK-İŞ have hunger and poverty line calculations for a 4-person family. Let's make calculations according to them”... If we were to verify the calculations from another perspective...

As of the end of October, both unions announced the poverty line at around 45 thousand TL. Let's assume that 45 thousand liras will be 48 thousand liras at the end of the year. If we go by two minimum wages for each family, the minimum wage should be 24 thousand liras at the end of 2023. If we add the 36 percent inflation expectation for 2024 on top of this (24000 * 1.36), we find 32 thousand 640 liras. If we add a 4 percent share from growth, we arrive at 33 thousand 945 liras.

Compared to 11 thousand 400 liras, it seems like a lot at first glance, but when we calculate with real inflation and the poverty line in real life, a fair minimum wage level for mid-2024 comes out to a value between 31 thousand 520 TL and 35 thousand 299 TL.

I anticipate the possible reactions of the government-supporting industry and trade chambers of the business world and organizations like MÜSİAD that will read this article: “We will go bankrupt, we will go bust, unemployment will increase.”

Then here are the answers:

If you were going to go bankrupt at this level of minimum wage, you would have already gone bankrupt in January 2022. Because this minimum wage level only returns to the beginning of January 2022 in real terms and can protect against the inflation that will arise for the first six months of 2024. I don't know the real profits of the entire business world, but what I do know is that the profits of the ISO 500 largest firms in 2022 alone increased by 65-70 percent in real terms after being adjusted for inflation. We are talking about 70 percent real earnings after inflation in 2022. The 2023 data has not been announced yet, but when looking at the three-month periods in the banking sector, profits are at the 400 percent level. Don't exaggerate, you won't go bankrupt.

Let's also look at it from the interest rate front. Last year, ENAG inflation was 137 percent. This year, it will most likely be at the 120 percent level. While there was inflation at these levels, for two years, you used loans with 20 percent interest, you received 230 billion dollars more on top of that famous 128 billion dollar sale from the Central Bank at a value far below what it should have been with the Central Bank's back-door sales, you dumped the exchange rate risk onto the state (the citizen), and you provided a tremendous income transfer. When inflation is 120 percent and interest rates rise from 20 to 40 percent, you business world representatives started saying, 'Oh, we will go bankrupt, unemployment will increase.' Do you not have the power to compete in real markets?

Being a businessman with constantly declining real wages and interest rates constantly far below inflation is not a skill. If you can only compete or survive under these conditions, it means you have already become a zombie company, and your survival is not a benefit but a harm to the economy. Stop threatening that unemployment will increase, close the company and be done with it. Take a look at what wage level and what real interest level companies in the world are doing business and competing at, keep up with world markets. Do you think that wealth transfers will last a lifetime, especially with wage levels whose purchasing power has been halved for two years and interest rates that are one-fifth of inflation? Those two years were a nightmare for low and fixed-income earners in Turkey, and for you, it was a Tulip Era that could not even be imagined. It is almost impossible for it to continue any longer. I am not proposing a socialist, communist model. Can't you think of doing business according to a competitive market economy, not according to a plunder and looting economy, a crony capitalism economy, or an economy of getting rich through influence peddling?

As for the lowest pension. Until 2015, the lowest pension was 40 percent above the minimum wage. Then it was equalized, and for the last two or three years, it has been at the 65 percent level of the minimum wage. The lowest pension should also be equalized with the minimum wage at the very least, by the most pessimistic calculation.

The minimum wage is not the state's issue, it is the business world's issue. Pensions are the state's issue. The Minister of Treasury and Finance Mehmet Şimşek and the government will ask the question that the business world asked above here as well. “Can the budget handle the lowest pension being at the 32 thousand lira level?”

The answer to this is as follows:

Being in power is the art of both keeping the economy alive and developing it with a fair tax system, and making a budget that will increase people's welfare. Turkey's current resources are more than enough for this. If you cannot do it, the voter will bring someone else.

The 32 thousand-35 thousand band is reasonable for the minimum wage and the lowest pension. Unfortunately, there is no strong unionism in our country. By law, DİSK cannot participate in minimum wage negotiations; the only union that participates is Türk-İş. Türk-İş's performance in past periods is obvious. In this case, the strongest trump card in the hands of workers and retirees for the minimum wage and lowest pension level we mentioned above is the local elections to be held in March. Yes, they say “local candidates first, then the party you support is important” in local elections, but in a period where such a severe distribution crisis is being experienced, the priority is to obtain the wage level that has been earned. The characteristics of the local candidate and the party come later.