The minimum wage should increase by 35 percent, interest rates should fall to 31 percent!

Upon reading the headline, you might ask, "What happened to Meriç? Why did he change his mind after spending months saying, 'A 45 percent increase, matching the TUIK inflation rate, is not enough, and even a 90 percent increase, matching ENAG inflation, is not enough. The minimum wage should increase by 239 percent and be 57,660 liras'?" You are right.

I have written quite a few articles regarding the minimum wage and pensions, directed at employers, the government, and the Central Bank, with the theme: "Abandon policies of exploiting labor, and do not make immoral proposals that wages should be determined according to future inflation expectations."

However, when I look at the unions and the main opposition party, the CHP, I find nothing to say.

I have written it many times. We have two inflation data sets. One is the inflation measured by TUIK. The other is the inflation measured by ENAG, which consists of independent scientists. Since ENAG began its measurements at the beginning of 2020, I have been calculating the erosion in the minimum wage and pensions starting from 2020. Meanwhile, I must state this: I trust ENAG inflation. Because I also calculate inflation according to my own consumption basket. The increase in my consumption basket and ENAG inflation go hand in hand.

The minimum wage in January 2020 was 2,325 liras... TUIK inflation increased by 507 percent from 2020 to the end of 2024. (Assuming December inflation will be 2 percent). In other words, the general price level rose 6-fold. At that time, the minimum wage that should have existed at the end of 2024 should have been 2,325 x 6 = 14,010 liras. Today it is 17,002 liras. This means that, as the President, Şimşek, and the bosses of MÜSİAD say, they have not crushed the worker under inflation. On the contrary, they gave the worker a high wage in 2024.

If you believe in TUIK inflation, it means you also agree with the interpretation above. But our objection is to the inflation measured by TUIK. I have calculated it many times. I wrote it here, and I explained it on television and on my own YouTube channel.

In the period from January 2020 to the end of 2024, the inflation measured by ENAG was 2,383 percent... The general price level has increased exactly 24.8 times. In this case, the level required for the minimum wage earner to reach the purchasing power of January 2020 is 57,660 liras...

First, the CHP came out and demanded that the minimum wage be 30,000 liras, saying, "If the minimum wage is not thirty, we are not in it."

Then, the DİSK Presidential Board made a statement. They said the minimum wage should be at least half of the poverty line. Since the poverty line is approaching 70,000 liras, they are indirectly pronouncing 35,000 liras.

The head of Türk-İş, who sits at the bargaining table, also said they would sign for 29,583 liras.

In January 2020, workers were not satisfied with their wages. I am going back to January 2020 because the other inflation data we have is from January 2020. I find 57,660 liras. The unions and the main opposition party, the CHP, are legitimizing TUIK inflation. After this point, it is not my place to say what the minimum wage should be. Those who fall by their own hand do not cry.

On the other hand, I will continue to share my thoughts regarding pensions. At one time, the lowest pension was 40 percent higher than the minimum wage. Now you have lowered it to 35 percent below.

The lowest pension was 1,500 liras in January 2020. According to ENAG, the general price level has increased 24.8 times. In this case, the lowest pension should be 1,500 x 24.8 = 37,200 liras. This level is the January 2020 level. In January 2020, the ratio of the budget deficit to national income in the state was 3.4 percent. The state seized the income of the pensioner and lowered their purchasing power. Well, did the state's budget deficit fall in return for this? No. The opposite happened... In 2023, the ratio of the budget deficit to national income was 5.4 percent. But this is also made-up data. If you add the KKM loss they loaded onto the back of the Central Bank, the ratio of the budget deficit to national income became 8.9 percent. The pension received by the retiree has eroded and evaporated. The state's budget deficit has increased 2.6 times compared to 2020.

DETERMINE INTEREST RATES ACCORDING TO FUTURE INFLATION AS WELL

Now let's come back to wages... The government, employers, and money market actors say; "Let the minimum wage increase as much as the future inflation expectation." I used to find this proposal very immoral and shameless. After hearing the demands of the unions and the main opposition party, the CHP, I gave up on the assessment of "immoral and shameless."

Well then, since pricing behaviors should be as much as future inflation... My suggestions are as follows:

The Central Bank's and the Medium-Term Program's inflation expectation is 21 percent. The upper limit is 26 percent... The growth expectation (target) in the economy is 4 percent...

First of all, the President should cancel the 44 percent Revaluation Rate decree published in the Official Gazette and lower the revaluation rate that the state will apply for 2025 to 22 percent. Let it be an example for pricing behaviors in the fight against inflation.

Do not just stop at lowering the Revaluation Rate to 22 percent. Limit the 2025 price increases of Telekom and Turkcell, which are under your control and are mercilessly exploiting—ripping off—the nation, to 22 percent.

The price of money is interest. Interest is also determined according to future inflation. The Central Bank will meet this week to decide whether to lower interest rates. Some expect a 1-point cut, others 2.5 points. That is, those who deposit their money with a 1-year maturity after the end of December will receive interest around 47-49 percent. You will give wage earners 21 percent, let's raise it a bit to 35 percent, as much as future inflation, and 47-49 percent for interest... In this case, determine the interest rate based on the upper limit of the year-end target, which is 26 percent inflation and 4 percent growth. Add the two together. (In percentage calculations, numbers are first added to 1, then multiplied by each other. Then 1 is subtracted. 1.26x1.04= 1.31) Lower the interest rate to 31 percent from the beginning of the year... See what happens? If you start to rejoice that exports will increase and the stock market will soar, a sudden flight of hot money will begin. You will cause the exchange rate to explode and trigger a new currency crisis.

"You say that if you lower interest rates too much, a currency crisis will explode, and you say increase the minimum wage by 239 percent. You say inflation is very high. How will this inflation fall, what should the government do?" you will ask?

We have written it many times. The fight against inflation cannot be done only with monetary policy and cutting wages. On one hand, you will take measures to increase supply, especially in agriculture; on the other hand, you will abandon the looting and ostentation that cause budget deficits, and you will implement a fair tax policy. And of course, you will establish the rule of law. There is technically nothing left for this government to do to fix the economy.