Meriç Köyatası writes: Minimum wage and inflation

Meriç KÖYATASI-12punto.com.tr

As someone who respects the sciences of economics, mathematics, and statistics, I do not take TÜİK (Turkish Statistical Institute) inflation seriously. Let us look at the minimum wage increase through the lens of ENAG (Inflation Research Group) inflation.

In 2023, they raised the minimum wage from 8,500 liras to 11,400 liras in July, and the minimum wage remained at 11,400 liras until the end of the year. In other words, the amount of the raise given to the minimum wage throughout the year was 34 percent. To present the 17,000 liras they determined for 2024 as if it were the 2023 minimum wage and to claim that they gave a 100 percent raise to the minimum wage in 2023 is to distort the truth. The rate of the raise given while transitioning from 2023 to 2024 is 100 percent.

The minimum wage raise rate that occurred within 2023 was 34 percent, the ENAG inflation rate was 120 percent, and the purchasing power of the minimum wage eroded by 55 percent. (The inflation experienced in 2023 is at the level of 62 percent according to TÜİK and 120 percent according to ENAG. The exact rates will be announced on January 3.)

The increase of the minimum wage to be applied for 2024 compared to 2023 is 100 percent, reaching 17,000 liras, but the purchasing power of this 17,000 liras at the end of January 2024 will remain 15 percent below that of the 8,500 liras of 2023. Furthermore, the 17,000 lira minimum wage will continue to erode by as much as the inflation that will be experienced in 2024.

There is also this reality: Looking at just the last year is neither correct nor fair. For the last two years, Turkey has been experiencing an unprecedented income-wealth transfer and distribution crisis. One must look at the last two years. In the last two years, the minimum wage has risen from 4,253 liras to 17,000 liras. There is a 300 percent increase.

The cumulative ENAG inflation for the last two years is 524 percent... If the 4,253 lira minimum wage at the beginning of 2022 had increased by the rate of inflation, it would have reached 22,285 liras. In this case, the 17,000 lira minimum wage has 76 percent of the purchasing power of the 4,250 liras at the beginning of 2022. Within the two-year period, 24 percent of the minimum wage earner's purchasing power has been stolen. And this erosion will continue by as much as the inflation that will be experienced throughout 2024.

That is why, in my previous articles, I suggested that the minimum wage should first be brought to the 22,000 lira level, and then increased by the expected inflation for 2024 to reach the 33,000-35,000 lira level. This proposal was not a demand for an increase in prosperity, but rather to catch up to the level of early January 2022, which none of us were satisfied with anyway.

One should not fall for fallacies such as "we increased the minimum wage by the rate of inflation," "we did not let it be crushed," or even "we increased it more than inflation." Ultimately, the ratio we must look at is the share of wages in the national income. The share of wage earners in the national income is constantly falling, both according to TÜİK's Turkey-wide measurements and according to the data of Turkey's 500 largest industrial enterprises. The table is very clear.

SHARE OF WAGE EARNERS IN NATIONAL INCOME (Percent)

YEARS TÜİK İSO (500)

2018 33.5 54.7

2019 34.7 51.5

2020 32.9 44.5

2021 29.9 32.2

2022 26.3 26.9

So, will this injustice be corrected? In Turkey, where union organization is weak and political parties cannot mobilize social opposition, things are difficult. Employees need to settle the score at the ballot box. The voting rates in cities where industrialization is developed and the working class lives densely, such as Istanbul, Kocaeli, and Bursa, will give us a clue as to whether the score is being settled at the ballot box.

News Source: Meriç Köyatası