AKP's 1300 lira minimum wage pledge challenges business world
Date
11/16/2015 7:59:44 AM
(MENAFN- The Journal Of Turkish Weekly) The main opposition Republican People’s Party (CHP) prioritized improvement in income distribution in its election manifesto for the June 7 elections also including pledges to advance social protection triggering criticism from the ruling Justice and Development Party (AKP) and particularly from President Recep Tayyip Erdoanat every opportunity. At every place he went Erdoan said he was appalled at the opposition parties’ pledges for the net minimum wage with the CHPvowing 1500 Turkish Liras (480 euros) the Peoples’ Democratic Party (HDP) 1800 liras and the Nationalist Movement Party (MHP) 1400 liras. “Believe me I am appalled. The minimum wage is being auctioned. One says 1800 the other 1500. They are not aware of the minimum wage. What is the minimum wage right now? It is 1000 liras. The employer cannot pay under 1000 liras. What does the state guarantee? It says you will pay a minimum of 1000 liras. This is an assurance…” During the June 7 campaign the AKP constantly asked CHPwhat the source of this would be. Following the drop in its votes to 40 percent AKP preferred to take the road of the CHP. It included the minimum wage pledge in its Nov. 1 election manifesto and told minimum wage earners that it would be at least 1300 liras. Against the AKP’s 1300 lira pledge the CHPpromised 1500 while the HDP said 2000 liras as the MHP said 1400 liras. Even though the AKP’s pledge was the lowest among the parties represented in the parliament it again corresponds to a 30 percent increase in the current figure. Babacan’s statement
The AKP will now be challenged to keep this pledge. What kind of effects will a net 30 percent raise in the minimum wage create? The person who is expected to steer the economy in the new government and words by the person who has led the economy for years Ali Babacan were enough to stir things up. Babacan said the issue of the minimum wage should not be speculated upon. Speaking to the state-run TRT news channel he said: “The minimum wage is determined by the Minimum Wage Commission. Both the employer and the employee segments are represented there. They sit down and talk. However the government’s view is quite influential. What did we actually say? We said the net minimum wage will be offered at 1300 liras to the commission for 2016. Our suggestion will be effective.” On the dynamics of the commission works on the direction of the government’s demand Babacan emphasized: “There should not be any speculation. Our 1300 is net and this is the figure to be implemented in 2016.” While Babacan was implying December 2016 for the net 1300 liras minimum wage meaning the wage for 2017 other top officials in the AKP sounded differently about the date. While Deputy Prime Minister Numan Kurtulmu said “Nobody should doubt that the minimum wage will be 1300 liras” Economy Minister Nihat Zeybekci said “If there are no legal problems we guess it will be on Jan. 1 2016.” Apparently there will be debates in the new government on the practice of the election pledge. Spokespeople for opposition parties and several unions started protesting the indecisive attitude of Babacan. On behalf of employers
The real reaction came from the employers and the head of the AnkaraChamber of Industry Nurettin Özdebir with a radical proclamation suggested in an interview to daily Dünya “The minimum wage should be abolished.” Özdebir criticized that the costs of the business world had been increased without consulting the business world. The rise in minimum wage will result after a while in downsizing and layoffs at SMEs he said. “The rise in minimum wage is very important. When you make a 30 percent rise then you are increasing the severance pay 30 percent also” he said. “When you increase a 1000-lira earner’s wage to 1300 then you need to raise the 1300-lira earners’ wage also and this will push everyone’s wage upward…. This is a decision that has been made without asking the business world. If wage increases in the manufacturing industry and real sector are not supported by productivity then it is an unjustified earning.” Özdebir also claimed that there were no minimum wage earners in the industry saying the minimum wage earners in that sector were cleaners and office boys. Actually a survey of Central Bank contradicts this.
How many minimum wage earners?
Wage statistics show that the minimum wage is nearing the average wage in Turkey. This fact was included in the Central Bank’s May 2015 Inflation Report on page 56. The microdata taken from the Turkish Statistical Institute’s (TÜK) Household Workforce Survey is presented as such: “Almost 35 percent of the total of wage earners are paid minimum wage or under… Among wage earners a clustering around the minimum wage is noticed. This is an indicator that minimum wage policies affect income distribution.” The lowest paid
While the share of minimum and under-minimum wage earners in general in the economy is 35 percent; in the industry construction and service sectors this rate is 38.5 percent 41.3 percent and 30.2 percent respectively. This rate goes up to 72 percent in agriculture and there are several industry and service sub branches where this rate climbs over 50 percent. The lowest paid ones work in personal care fields such as dry cleaning hairdressers food and beverages services commerce and similar service sectors. In the industry sector the highest rate of minimum wage earners are in sub branches such as food clothing furniture the production of metal products and textile production. Below the minimum
While the minimum wage is discussed those who cannot even earn the minimum wage and millions without any income should be remembered. There are millions who lack a job that pays 1000 liras. The population over 15 is roughly 57 million and only 25.5 million of them have a paying job. The official number of the jobless is 3 million but you can talk about at least another 3 million who are not counted. Thus 6 million need a job even if it pays the minimum. Besides these millions not every wage earner can enjoy the “benefits” of the minimum wage. According to TÜK there are more than 2 million unregistered workers who cannot earn the official minimum wage. Thus before discussing the figures in minimum wage we should first remember the millions who cannot work even if it pays the minimum. Why low?
While 35 percent of workers earn minimum wage or lower that should not create the impression that the remaining 17 million are working with much higher wages. It was in July that the net minimum wage became 1000 liras. With today’s exchange rates this is about $300 to $330. Those who earn more are predominantly earning one-fourth more of the minimum wage at around 1200 to 1500 liras. Why is this so? These 17 million workers are without any organization; they do not have unions. Only 10 percent of wage earners are members of unions. Even they cannot use their rights freely. There are only 2000 people who can go on strike. In major workplaces the cabinet block strikes by postponing them. The official 10 percent and unofficial 18 percent rates of unemployment are enough to “tame” the employed. With this fear in mind they do not dare risk losing their jobs. In such a case it is not difficult to hire people to work for the minimum wage or less especially in certain sectors and in certain underdeveloped countries.