It was said there would be no mid-year raise! Prof. Dr. Hayri Kozanoğlu: 'There will be a significant decline in the living standards of working people'

Şenol ÇARIK/ 12punto.com.tr

Speaking to 12punto and evaluating President Erdoğan's remarks that "we are strictly committed to our roadmap in the economy" and "we did not implement an election economy despite being subjected to many pressures during the election period," Prof. Dr. Hayri Kozanoğlu commented, "These statements by Erdoğan show that he also supports Mehmet Şimşek's austerity program for now."

Stating that a scenario was likely presented to Erdoğan saying, 'If we loosen up, the economy will collapse completely and inflation will explode. Therefore, let's bite the bullet,' Prof. Dr. Hayri Kozanoğlu said, "Mehmet Şimşek's program is largely based on attracting foreign capital. By foreign capital, it is not meant capital that invests in the country, produces goods or services, and creates employment. It refers to what we call hot money, money that will enter the stock market, government bonds, and repo accounts. These investors want the Turkish Lira to lose value so they can buy more Lira with their Euros and Dollars, especially to provide opportunities for profitable windfalls with high interest rates. On the other hand, they want reserves to be strengthened to a certain extent so that when they want to exit tomorrow, they can leave the country without suffering a loss. Mehmet Şimşek has an economic design based on this."

"THIS OPPORTUNITY WILL ALSO SHRINK"

Kozanoğlu continued as follows:

"Mehmet Şimşek constantly tells employer organizations to 'turn to exports.' With the rise in interest rates, measures such as increasing the monthly maturity difference for credit cards and consumer loans, narrowing limits, and raising the minimum payment amount are on the agenda. These have started to be taken gradually. People's incomes and purchasing power are already very low. Consequently, their living standards were declining. Before the 2023 elections, they were able to maintain their lives by borrowing, which prevented a sharper decline in their living standards to some extent. Now, this opportunity will also shrink. Accordingly, the demand for goods and services in the economy will fall. That is why he says; 'you turn to exports.' He largely ties their gaining competitiveness in exports to the reduction of wages."

"THE INFLATION FOR MINIMUM WAGE EARNERS IS 100 PERCENT"

Touching upon the statement by the Minister of Labor and Social Security Işıkhan that there will be no mid-year raise for the minimum wage in July, Prof. Dr. Hayri Kozanoğlu noted the following:

"The minimum wage was set at 17 thousand 2 Lira in January. It had been pulled to a point that prevented purchasing power from falling too much relatively. But with high inflation one after another, the purchasing power of minimum wage earners is declining every month. January inflation came in at around 6.5 percent. February was around 5 percent. In March, it was announced as 3.15 percent. Even if we assume that the official TÜİK figures reflect the truth entirely; there was a 15 percent increase in the first 3 months. You are buying the same goods and services 15 percent more expensively and your purchasing power is eroding by 15 percent. There are also sub-items to this. There are items such as food, rent, and transportation, which minimum wage earners allocate the most to their budgets. According to official figures, the increase in rent in the last year is seen as 121 percent. 75 percent in food, 85 percent in fresh vegetables and fruits, and 95 percent in transportation. The inflation for a minimum wage earner is more or less around 100 percent. Moreover, with official figures..."

Stating that there will be a very significant decline in the living standards of working segments in Turkey in the coming months, Kozanoğlu said, "People will not accept this as fate. Naturally, social movements, actions, and protests will increase. I am among those who think that things will not continue this way."

"THE HIGH LEVEL OF INDIRECT TAXES IS AGAINST THE WORKING CLASS"

Touching upon the picture in the general economy, Prof. Dr. Kozanoğlu noted the following:

"The budget figures for the first three months have been announced. The item that increased the most among revenues is the VAT collected domestically, which rose to 222 billion Lira, an increase of 215 percent. All indirect taxes, that is, the special consumption tax, increased by 109 percent. VAT collected from imports increased by 80 percent. The sum of these three items has a 65 percent share in total tax revenues. The fact that indirect taxes have such a heavy weight means a development that further worsens income and wealth distribution against the working segments.

Now, when you buy meat, rice, or yogurt, you pay VAT, or when you use your phone, you pay SCT. It is not the case that a dollar billionaire eats a thousand kilos of meat or 10 yogurts a day. They pay the same amount as an ordinary citizen, and this ultimately creates an effect that further worsens income and wealth distribution.

'RETIREES' OBJECTIONS MAY REFLECT ON OTHER SEGMENTS'

When we look at other tax items, for example, income tax has increased by 120 percent and is the most heavily weighted item. But this is also largely taken from the taxes paid by employees like you and me. Corporate Tax increased by 85 percent, and the weight of taxes taken from capital and rents, which is only 28 billion Lira, is very low. It is understood from this that in Mehmet Şimşek's model, the burden is again placed on the working people and the broad masses of the public, while both a wealth tax on capital and significant taxation of stock market gains, interest income, and other capital gains could be on the agenda. Because all statistics, including the Gross Domestic Product (GDP) statistics announced by Turkey, show that labor's share of the total pie has declined, falling to around 25 percent. Therefore, instead of taking a step to correct this, steps are being taken that will worsen the balances of the economy against the masses of the people. That is why I think that this will not be accepted as fate in the coming months, and the objections started by retirees will reflect on other segments as well.

'A DEBTORS' MOVEMENT MAY COME TO THE AGENDA'

There is a very significant increase in credit card spending in particular. In the coming months, the rates of unpaid debts and those falling into follow-up will also increase. With the rise in interest rates, this will start to become a much greater burden. I also see a high probability that an objection from debtors will come to the agenda, and even that a debtors' movement could form.