The debate over 'increasing the minimum wage based on inflation targets'

As initial assessments regarding the minimum wage begin to emerge in the public sphere, remarks by Istanbul Chamber of Commerce President Şekib Avdagiç have opened the door to a new debate.

While Avdagiç stated that the minimum wage increase should be based on the targeted inflation rate rather than the realized rate, economists have shared their reactions to this suggestion.

Former Central Bank of the Republic of Turkey (TCMB) Chief Economist and Bilkent University faculty member Prof. Dr. Hakan Kara, in an assessment shared on his X account, emphasized labor's share of national income, stating, "It is not fair to determine wages based on inflation targets while labor's share of national income is at this level."

According to data from the Turkish Statistical Institute (TÜİK), the share of labor compensation in gross value added fell to 34.3 percent in the second quarter of 2023.

Bilkent University faculty member Prof. Dr. Refet Gürkaynak also shared his views on the matter. In a post on his X account, Gürkaynak wrote, "Are companies going to increase the prices of the products they sell at the targeted inflation rate as well? Or should we only look at the Medium-Term Program (OVP) for labor? (The figures in the OVP are forecasts, not targets, but we won't touch on that; later they might just say the target is 5 percent, so the minimum wage should increase by that much.)"

A similar comment came from economist Haluk Bürümcekçi. Bürümcekçi said, "Istanbul Chamber of Commerce President Şekib Avdagiç said that the minimum wage to be determined at the end of the year should be increased by the inflation rate targeted in the OVP. Will he also increase the prices of products at his own company in parallel with the OVP?"

AVDAGİÇ'S STATEMENTS REGARDING THE MINIMUM WAGE

Speaking at the 'Service Export Champions' award ceremony organized by the Service Exporters' Association, Istanbul Chamber of Commerce and Service Exporters' Association President Şekib Avdagiç stated regarding the minimum wage, "Businesses in Turkey have a significant shortage of personnel. I do not think we will enter a period of stagnation in layoffs or hiring in the coming period. The minimum wage should be determined in a way that does not disrupt the balances established, taking into account current policies and the targeted inflation rate. In this area, of course, decisions must be made in a way that does not disrupt the balance of the market, while also considering the expectations of employees."

According to the Medium-Term Program (OVP), inflation is expected to be 65 percent at the end of 2023, 33 percent at the end of 2024, 15.2 percent at the end of 2025, and 8.5 percent at the end of 2026.

News Source: 12punto