Overview of Türkiye’s Economic Situation
Türkiye’s economic board has decided not to increase the minimum wage in July, despite rising inflation throughout the year. Treasury and Finance Minister Mehmet Simsek downplayed concerns about inflation and living costs during a closed-door meeting with government officials. The minimum wage in Türkiye was last set at ₺22,104 ($548.91) in December, representing a 30% hike, but still well below the annual inflation rate of 44.38% at the time.
Minimum Wage and Its Impact on Workers
The minimum wage in Türkiye is earned by an estimated 42.8% of non-agricultural salaried employees, according to a 2021 central bank study. Approximately 83 out of every 100 workers in Türkiye earn wages close to the minimum wage. Moreover, 53% of workers in the country earn a wage no more than 50% above the minimum wage, which translates to around ₺25,500 based on 2024 figures.
Inflation and Its Effects on Turkish Households
Consumer prices rose by over 16% in the first half of 2025, eroding real wages by a similar rate and worsening the cost-of-living burden for Turkish households. The minimum wage was equivalent to $625.39 at the beginning of the year but fell to $555.20 by the end of June, reflecting a 14% depreciation in the Turkish lira against the dollar. Annual rent inflation stood at 82.97%, while overall housing inflation—including utilities, maintenance, and rent—was 65.53%.
Minister Simsek Addresses Concerns
At the ruling Justice and Development Party’s seasonal consultation and evaluation camp, Minister Simsek answered questions from members of parliament regarding disinflation and economic well-being. He emphasized the importance of balancing the economy, stating that wage increases without structural reform would be short-lived. Simsek also acknowledged high education costs, especially at private schools, but noted that only a small portion of the population is affected.
Sticky Costs Weigh on Turkish Households
The number of salaried employees in Türkiye stood at 15.88 million as of May 2025. The same data reveals that education, housing, and health—known as sticky-price groups for their persistent inflationary effects—saw annual increases of 33.91%, 26.77%, and 21.56%, respectively. Annual inflation in Türkiye slowed for the 13th consecutive month in June, reaching 35.05%, still far from the central bank’s year-end target of 24%.
Retirement and Public Servant Wages Also Face Pressure
Pensions and public servant wages, which were raised by 16.67% and 15.57%, respectively, in July, also drew criticism. The minimum retirement wage was raised to ₺16,881, still below the minimum wage, while the minimum public servant wage was adjusted to ₺46,990. The government proposed a 16% raise for public workers in the first half of 2025 and 8% in the second half, prompting backlash from labor unions.
Cost of Living Surges, Consumer Loans Soar
According to Turk-Is, the monthly food expenditure for a family of four (hunger threshold) is ₺26,115. The total income required to meet all basic expenses (poverty threshold) is ₺85,066 ($2,106). The monthly cost of living for a single worker is ₺33,587—₺11,482 more than the minimum wage. Rising living costs were also reflected in consumer loans, which surpassed ₺2.2 trillion ($173.68 billion) as of June, up 34.68% year-on-year.
Minimum Wage’s Impact on Türkiye’s Inflation, Interest Rate Path
The main reason Türkiye opted not to raise the minimum wage mid-year is concern over its inflationary effects due to higher business costs. According to the Central Bank of the Republic of Türkiye’s (CBRT) 3rd 2021 Inflation Report, a 1% rise in the minimum wage is estimated to increase consumer inflation by 0.06 to 0.08 percentage points within a year. Inflation is also the key metric for a possible rate cut by the central bank, which is expected to resume easing at the next Monetary Policy Committee (MPC) meeting.
Conclusion
In conclusion, the decision not to increase the minimum wage in Türkiye has significant implications for the country’s economy and its citizens. With inflation continuing to rise and the cost of living increasing, many Turkish households are struggling to make ends meet. The government’s decision to prioritize economic stability over wage increases may have short-term benefits, but it may also exacerbate the poverty and inequality that already exist in the country. As the economy continues to evolve, it is essential to monitor the impact of this decision on Türkiye’s inflation, interest rates, and overall economic well-being.
