Erdoğan's statement on minimum wage: A notable inflation detail? Which inflation will the AKP base it on?

Speaking to journalists on the plane after the G20 summit in Brazil, President and AKP Chairman Recep Tayyip Erdoğan made important statements regarding the minimum wage and pension increases.

In response to the question, "It is the end of the year again, and everyone's eyes and ears are on the increases in the salaries of both employees and retirees, but we know that the main issue is purchasing power. There is a decline in inflation, and how will this decline reflect on the lives of both employees and retirees in the coming period?" Erdoğan replied as follows:

Look, last year we gave our minimum wage-earning brothers and sisters a 107.5 percent raise. Last year, inflation was 65 percent. This year, we gave a 49 percent raise. As of October, inflation is below 49 percent. In other words, we will complete the year with a figure around 44 percent, according to our Central Bank's estimates. In summary, we will not let our retirees, our civil servants, our minimum wage earners, or any segment of society be crushed by inflation. This was the picture for the last 22 years, it was the same for the last year, and it has not changed within this year.

The opposition is exploiting this issue, but we will continue to act within the same principles in the coming period, and we will treat our employees in a framework that protects their purchasing power, above the rate of inflation. But the essential thing is to reduce inflation permanently. Inflation in the basic goods purchased by our citizens is 28.5 percent. In goods including vegetables, fruits, and food, it is around 40 percent. The inflation that is currently keeping the overall rate a bit high is in services such as rent and private education. Inflation has entered a permanent downward trend, and hopefully, it will continue on this path."

Erdoğan's words, "We will treat our employees in a framework that protects their purchasing power, above the rate of inflation," raised questions about which inflation rate would be used as a basis.

WILL TARGET INFLATION BE USED AS A BASIS?

The Central Bank of the Republic of Turkey's (TCMB) 2025 estimate has been raised from 14 percent to 21 percent.

If 21 percent is taken as a basis, a raise of 3 to 5 percent is expected to be added on top, along with a welfare share.

If such a decision comes out of the Minimum Wage Determination Commission, the minimum wage is expected to be around 21,500 TL.

However, it is rumored that the employer side has an expectation between 25 and 30 percent.

If a raise at this rate is implemented, the 2025 minimum wage will be as follows:

If 25 percent: 21,252 TL

If 30 percent: 22,102 TL

If the inflation message in Erdoğan's statement refers to the 44 percent inflation estimate for the end of 2024, a raise between 44 and 50 percent is expected, including the welfare share.

If 44 percent is taken as a basis, the minimum wage will be 24,482 TL, and if 50 percent is taken as a basis, it will be 25,503 TL.