In a move that is already sparking debate, Turkey will raise the minimum wage by 49% to $578 from January. The Minister of Labor announced last night that after long negotiations with the labor unions it was decided to set the minimum wage at 17,002 Turkish Lira, i.e. an increase of 49%. It is the second time in a year that the minimum wage has increased. But the uncontrollable accuracy in the summer months mainly in food and rents dissipated the purchasing power of Turkish consumers. From June 20, when the previous minimum wage was announced, to yesterday, December 27, the minimum wage decreased by $96 due to the continued slide of the Turkish lira, meaning it lost about a third of its value.

Yesterday’s big increase in the minimum wage was a necessary decision for the survival of a large part of society. More than a third of the country’s workforce is paid the minimum wage, but it is also a benchmark for wider wage bargaining in the economy. This move may have been necessary and provide temporary relief. It will increase citizens’ purchasing power, but it will also push inflation, which hit 62% last month, back up. At the same time, it will undermine the inflation control measures implemented by the new leadership of the Ministry of Economy and the Bank of Turkey with gradual reductions in interest rates.

Political benefit for Erdogan

But there is also the political dimension. Such a bonanza three months before municipal elections on March 31 will boost the popularity of President Erdogan, who is desperate to bring his own people into self-rule, even if the good days for Turkish citizens are short-lived.