Interest rate decision changes the balance: New forecast for minimum wage

The Central Bank of the Republic of Turkey's Monetary Policy Committee has increased the one-week repo auction rate, which is the policy rate, by 500 basis points to 35 percent. There is curiosity regarding how the CBRT's interest rate hike will affect inflation. At this point, eyes have turned to the 2024 minimum wage increase.

According to a report by Milliyet; Certified Public Accountant Ahmet Kurtulmuş made statements regarding the new minimum wage.

“Interest rate hikes are actually one of the arguments used by economic management in the fight against inflation, not something that triggers it. Interest rate hikes are an instrument used in the fight against inflation, not a cause of inflation growth. Economic management has also been using interest rate hikes frequently in recent times.

We are maintaining our year-end inflation forecast at the 70 percent level. Since our inflation projection is realized at around 70 percent, an inflation adjustment in the 42-43 percent band will emerge for SSK, Bağ-kur, civil servant retirees, and civil servants as the second six-month inflation difference.

A collective bargaining raise will be added for civil servants and civil servant retirees. We are of the opinion that civil servants and civil servant retirees will receive a 50 percent salary increase.

I foresee that the inflation difference, which is in the 42-43 band for SSK and Bağ-kur retirees, will be completed to 50 percent with a 6-7 point welfare share touch. I expect that a single rate will be applied to civil servants, civil servant retirees, minimum wage earners, and retirees, and that there will be a 50 percent year-end raise.

PROVIDED A RATE

For years, the President has had an approach. This approach is to ensure that employees and retirees are not crushed by inflation under any circumstances. Actions are being taken with this determination. I think the minimum wage will be determined in the new year with an increase above inflation. Considering that there will be inflation between 42-43 percent for the second six months of the year, a 50 percent increase will be made to the minimum wage with a 6-7 point welfare share touch.

A raise of around 17 thousand 100 TL will be given to minimum wage earners here. I think this is an amount accepted by the market for both employers and employees. When this amount is determined, there will be no dissatisfaction on the part of the worker or the employer.

The minimum wage support amount, which is 500 TL, is expected to be increased to the level of 750 TL, in line with the raise rate to be applied to the minimum wage. I am of the opinion that this will be covered by the government.”