ANKARA (Reuters) – Turkish President Recep Tayyip Erdogan has eliminated a retirement age requirement, clearing the way for more than two million workers to retire immediately, as he gears up for a heated election.
The move allows about 2.3 million employees to claim early retirement - regardless of age - as long as they meet set requirements. The measure applies to people who started working before September 1999, and who have completed 20-25 years of social security-registered working life.
Turkey’s retirement age previously stood at 58 years for women and 60 years for men.
The new measure - which has been advocated by Turkey’s big labor groups - comes as Erdogan faces a difficult election next year.
Erdogan’s key base of working-class support has been hit particularly hard by Turkey’s economic crisis, which has seen savings erode as inflation shot to 85 percent.
Last week, Erdogan announced a 55 percent increase in the country’s minimum wage, though the plunge in the lira’s value means that actual wages have increased only fractionally in dollar terms.
Turkey’s government estimates that the new retirement package will cost around 250 billion liras ($13.4 billion) in the first year, though the amount is expected to increase as millions more become eligible in the coming years, according to Bloomberg.
Many emerging market economies have been battered by a rising U.S. dollar and global inflation exacerbated by the war in Ukraine, however, economists say that Turkey’s woes have been largely self-inflicted.
Erdogan subscribes to an unorthodox economic theory that high interest rates cause inflation. He has pressured the central bank to cut borrowing costs and increase credit access, despite conventional wisdom saying otherwise.
Turkey’s official inflation reading of 84.39 percent means that banks lose 75.39 percent of a loan’s value if they lend money for a year at the official interest rate.
Turkish officials have revised down inflation predictions and now expect the headline number to stand at about 65 percent.