ITO President objects to additional minimum wage hike

Istanbul Chamber of Commerce (ITO) President Şekib Avdagiç made evaluations regarding the agenda of the business world.

Meeting with members of the press, Avdagiç touched upon the tightening steps of the Central Bank of the Republic of Turkey (TCMB) and stated, "As a country, we must lower inflation effectively and as soon as possible. If we are going to lower inflation, there is no country in the world that has achieved this without touching anything or entering anyone's comfort zone."

Expressing that there are certain rules, principles, and concepts for lowering inflation, Avdagiç said that Turkey has put forward a set of rules to fight inflation with the Medium-Term Program (OVP), and that the outputs obtained in the last 6-8 months, while not meeting expectations 100 percent, are moving predominantly in this direction.

Stating that a vicious cycle should not be entered in the coming period, Avdagiç continued his words as follows:

"Of course, touches will be made here over time, but we are a country that has to lower inflation permanently and quickly. For the well-being of us all—the business world, citizens, the government, our international reputation, and in terms of price stability and securing domestic and foreign borrowing under more favorable conditions—our primary goal is to lower inflation permanently. Therefore, we must all work together to ensure that the package put forward to lower it works healthily. This cannot be achieved by a step taken only by the business world, exporters, importers, or the public sector. We must adopt, internalize, and embrace this as a society as a whole. For the policy to be carried out appropriately, the 85 million people—or 65-70 million if we exclude children—have a shared responsibility. We must be able to achieve this as soon as possible within this shared responsibility."

Avdagiç stated that a rational process is continuing regarding economic policies and that some individual irrational outbursts should not be generalized and acted upon.

Pointing out that there is a correlation between the last 12 months of inflation and the last 12 months of exchange rate changes, Avdagiç explained that the relationship between the exchange rate and inflation is currently proceeding in a reasonable balance.

OPPOSED TO EXPECTATIONS FOR AN ADDITIONAL MINIMUM WAGE HIKE

When asked about expectations for an interim minimum wage hike, Şekib Avdagiç said that the minimum wage was announced for one year, and therefore the entire business world had prepared its budgets accordingly.

Avdagiç said, "We have no business with speculation. We are the Istanbul Chamber of Commerce. There is a minimum wage determined by the public sector. There is a framework put forward when determining this. We and the companies we represent have made our budgets by taking into account this framework and the discretion exercised by the public sector. There is a discourse brought to the agenda by the state regarding this, and we foresee that this discourse is valid for this year."

Stating that the labor law should be evaluated cumulatively, Şekib Avdagiç emphasized that it would not be correct to evaluate only one or two sub-headings, such as the reduction of working hours, in isolation.

Stating that according to research, Turkey is "number 1" by a wide margin in the world in terms of labor market rigidity and that the Turkish business world cannot sustain such rigidity for a long time, Avdagiç said that while all countries have some headings regarding job security, these headings are more detailed in Turkey.

Avdagiç noted that these headings are; severance pay, the additional burden the employer faces in case of retirement, unemployment insurance, job security, and union compensation, and reported that Turkey is the only country where these 5 mechanisms are applied.

Stating that it is impossible for the Turkish business world to ensure its competitiveness with this rigidity, Avdagiç made the following evaluations:

"There is a multi-stage issue regarding the burdens on employment. There is severance pay. 30 days for every year. The employer faces an additional burden with retirement. We have unemployment insurance. De facto, the employer pays for this as well. There is job security. When you dismiss someone, there is 8 months plus 4 months of reinstatement compensation, and there is union compensation of at least 12 months. Therefore, we are the only country where these 5 mechanisms are applied. There is no such 5-fold structure in OECD and EU countries. When an employee says 'I am leaving,' they leave, and there is nothing protecting the employer regarding that. At most, there is an obligation to work for the duration of the notice period. Therefore, it is not possible to ensure the competitiveness of the Turkish business world in the coming period with this rigidity. In other words, the public sector needs to reduce its burdens on employment, and this 5-stage rigidity needs to be reduced."

"ONLY 55 PERCENT OF THE MONEY COMING OUT OF THE EMPLOYER'S POCKET REACHES THE EMPLOYEE"

Stating that the rate reaching the hands of an employee with a gross monthly salary of 100 thousand liras is 55 percent, Şekib Avdagiç said, "In other words, only 55 percent of the money coming out of the employer's pocket reaches the employee's hand. We need to review the regulations on this matter."

Expressing that they are discussing the prevention of informality, ensuring that employees do not suffer any loss of rights, and making employers more competitive, Avdagiç used the expression, "We need to both optimize the public burden on employees and wages and review this 5-fold mechanism."

Avdagiç underlined that the process should be carried out with an inclusive approach while the labor law is being discussed.