Due to the hyperinflationary environment in Turkey, minimum wage hikes had to be delivered twice in 2022. Another hike for the second half of 2023 was already under discussion a the start of this year.

Effective as of July 2022, the government hiked the monthly net minimum wage by 30% to TRY5,500 ($295 as of end-December). Prior to that, in January 2022, it pushed up the net minimum wage by 50% to TRY4,250.

Around half of Turkey’s labour force earns the minimum wage.

For May, the Turkish Statistical Institute (TUIK, or TurkStat) released official consumer price index (CPI) inflation at 39.59% y/y. The TUIK’s official index was up by 15% in the month compared to the end-2022 level.

The Istanbul-based ENAG inflation research group of economists, meanwhile, released an inflation figure of 109% y/y for May.

The hunger threshold, representing the required minimum monthly food expenditure for a four-person family, stood at TRY 10,362 ($438), up 72% y/y, in May, a monthly survey by the yellow labour union Turk-Is showed on May 30.

The poverty threshold for a four-person household, meanwhile, stood at TRY 33,752 per month as of May, up 72% y/y.

The minimum cost of living for a single person was TRY 13,439.

Turk-Is represents workers on the minimum wage determination commission. The employers’ confederation TISK and the government are also present on the tri-party commission.

Turkey is in a price-wage spiral although wage hikes remain below both the official and actual inflation figures. Currently, Turkey’s government is moving to a phase of orthodoxy in economic policy making. Breaking the price-wage spiral, namely keeping wage hikes significantly below inflation, will be under discussion.

On the other hand, the country is set to hold local elections in March 2024. With hikes set to come through in July and January 2024, the minimum wage will be raised twice prior to the elections.

Turkey’s inflation is always cost-side, generally due to currency depreciation. Wage increases follow price increases.

As of June 12, the USD/TRY rate in the interbank market was up 38% y/y to 23.65. The latest record high of 23.64 was registered on June 8.

As the Erdogan regime turns to orthodoxy, 25 and 27 to the dollar are among the numbers regularly talked of for the USD/TRY pair in the bargaining with the finance industry for a quick lira devaluation. The pair was kept below the 20-level until the end of the presidential vote that was held on May 28.