ANKARA (Middle East Eye) – The Turkish government announced on Tuesday an increase to the monthly minimum wage by another 34 percent starting on 1 July.
The monthly minimum salary will increase to about $483 and is part of an effort to ease the impact of inflation, which until recently was one of the highest in the world.
In December last year, the government increased the monthly minimum wage by 55 percent. At the time inflation stood at 85 percent.
In May, inflation dropped to just below 40 percent, its lowest level since 2021.
“The minimum wage assessment commission completed its work with an agreement between the workers and employers,” Labour and Social Security Minister Vedat Isikhan said in a televised address from the capital Ankara.
The increase will help to alleviate the purchasing power among workers, over a third of whom earn the minimum wage.
Turkish President Recep Tayyip Erdogan, who won re-election last month, promised to fight inflation and increase the minimum wage as part of his campaign.
Despite the big headline wage boost, the plunge in the lira’s value means that actual wages have increased only fractionally in dollar terms over the past year.
In 2023, the Turkish lira lost around 20 percent of its value against the dollar.
While the entire world has seen price rises, which have been compounded by the war in Ukraine, many economists say that Turkey’s inflation problem is 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.
The lira has shed more than 90 percent of its value over the past decade as the country has been hit by soaring inflation which has also driven away foreign investors.
More than $27bn in foreign currency reserves have been burned through since the end of 2022 as the government sought to prop up its currency and finance its enormous current account deficit.