Türkiye’s minimum wage struggle: Beyond the numbers

Türkiye’s government announced a 30% increase in the minimum wage for 2025, setting the monthly salary at ₺22,104 ($630.36). The decision came after multiple discussions by the Minimum Wage Determination Commission, concluding a series of meetings throughout December. While the hike was designed to address inflation concerns, it fell short of demands from labor unions, reigniting debates over economic fairness and inflation strategies.

Labor unions, including the Confederation of Turkish Labor Unions (TURK-IS), had pushed for a 70% raise to ₺29,583, citing rising costs of living. However, the final decision left many unsatisfied, sparking criticism regarding wage policies and economic priorities.

Experts warn that, from humanitarian, economic, financial and democratic standpoints, the approach is flawed and highlights structural issues.

Inflation and economic challenges

Türkiye’s economic landscape has been marked by volatile inflation, which peaked above 80% in 2022 before moderating to 48.58% in October 2024. Despite some stabilization, inflation remains high by global standards, putting pressure on households.

Economists warn that the increase may not keep pace with inflation rates, as essential goods and housing prices continue to surge. Korkut Boratav, a renowned economist, in talking to Türkiye Today, highlighted that the wage hike fails to reflect the actual cost of living, especially in major cities like Istanbul, where even two standard incomes are often insufficient to cover rent and utilities. 

‘An operation in favor of state and capital‘

Boratav argued that the thin wage increase may serve as a mechanism to redistribute wealth in favor of the state and capital owners. He pointed out that while wages rose by 30%, the government increased its tax collection rates—known as the revaluation rate—by 44% for 2025. This move ensures higher state revenue while keeping wages below inflation-adjusted levels.

He emphasized that profit margins for businesses are systematically expanded by allowing price adjustments that outpace wage growth. Boratav described the policy as an “operation to shift income distribution” in favor of capital and government revenues.

Labor unions’ reactions and concerns

Labor unions were quick to reject the decision, accusing the process of lacking transparency and fairness. TURK-IS boycotted the final meeting, arguing that employer groups wield disproportionate influence over wage negotiations.

Critics argue that the increase does little to alleviate economic struggles. Widely known Turkish economist Cuneyt Akman labeled the decision as inadequate, asserting that the wage hike “fails by every measure.”

Akman criticized claims that higher wages fuel inflation, pointing to international research—including Nobel-recognized studies—that refute such theories. He argued that real wages have been falling, contradicting the policies of the government aimed at price stability. Instead, Akman advocated for wage policies that boost purchasing power as a means of fighting inflation.

Akman, in his remarks to Türkiye Today, also argued that the inadequate wage hike technically benefits neither workers nor businesses. He noted that rising costs and limited wage increases could suppress domestic demand, ultimately harming growth.

The lack of mid-year adjustments and concerns about further erosion of purchasing power fuel doubts about the policy’s long-term impact.

Structural issues in wage policy

Both Boratav and Akman stressed the need for structural reforms in Türkiye’s wage-setting mechanisms. Akman highlighted the democratic deficit in labor negotiations, calling for stronger union representation and collective bargaining rights.

Akman also criticized Türkiye’s reliance on minimum wages as a benchmark for average earnings, which leads to widespread economic vulnerability. Experienced economist emphasizes that the biggest question lies in the democratic aspect of the negotiations, pointing out the need to shift away from this model, which requires policies promoting unionization and better labor protections for the worker class to negotiate their labor, rather than having terms dictated from above.

Akman further stated that relying on wages that merely ensure survival diminishes productivity and economic growth, describing the current structure as unsuitable from every standpoint possible.

He concluded by stating that the real threat is “the minimum wage becoming the standard salary in Türkiye, which has effectively lowered overall earnings, despite the ruling party’s relatively decent increases to the minimum wage over the years.” Adding, “the focus should be on reducing dependence on minimum wages through improved structures.”

Balancing economic stability and worker welfare

Government officials defended the increase as a balanced approach to manage inflation without disrupting economic growth. Finance Minister Mehmet Simsek’s focus on fiscal discipline and monetary tightening to stabilize the economy seems to be gaining ground.

President Recep Tayyip Erdogan reiterated the government’s intent to support fixed-income earners without undermining broader economic programs. Erdogan stated, “We aim to raise the standards of fixed-income earners to the best possible level without disrupting the economic program, which has already started to yield results.”

Monetary policy

Following the wage announcement, the Turkish central bank lowered interest rates by 250 basis points to 47.5%, aiming to stimulate growth while maintaining a gradual disinflation path. Analysts expect further rate cuts in 2025 as the central bank reduces its meetings from 12 to eight sessions per year.

While some international investors foresaw the cautious approach, domestic criticism remained focused on the policy’s failure to protect low-income workers from inflationary pressures.

Future outlook

Türkiye’s approach to wage adjustments reflects broader tensions between economic stability and social equity. With no elections on the horizon, the main opposition party is making efforts to garner broad support against the decision, while there is growing speculation about whether the government will backtrack on it.

Economists warn that continued reliance on wage suppression and fiscal tightening may exacerbate inequality and erode public trust. Calls for reforms include improving tax fairness, enhancing labor rights, and promoting sustainable growth strategies.