Türkiye to Increase Minimum Wage to $630 in 2025
In a significant economic move, Turkish President Recep Tayyip Erdogan announced that the net monthly minimum wage in Türkiye will be raised to 22,104 Turkish liras, equivalent to approximately $630.36, starting in 2025. This decision marks a 30% increase from the current wage levels and is expected to impact around 9 million workers across the nation. The adjustment is viewed as a crucial benchmark for private sector salaries, reflecting the government's commitment to improving living standards amid ongoing economic challenges.
Economic Implications of the Wage Increase
Economists have expressed concerns that the substantial increase in minimum wage could lead to heightened inflation in the upcoming months. This wage hike is closely monitored as it plays a pivotal role in shaping Turkish economic policy. Investors have cautioned that any wage increase exceeding 30% could disrupt the central bank's inflation forecasts and complicate the timing for potential interest rate cuts, which have not occurred since February 2023. Currently, Türkiye's inflation rate has decreased to 47.09% in November, down from a peak of 75% in May.
Future Outlook for Inflation and Interest Rates
Analysts predict that the minimum wage adjustment aligns with the inflation forecast for 2025, which is expected to ease to around 21% by the end of next year. Selva Demiralp, a professor at Koc University in Istanbul, noted that the wage increase is designed to accommodate anticipated inflation, potentially easing the central bank's challenges. The Monetary Policy Committee is set to announce its interest rate decision soon, with many economists anticipating a cut from the current rate of 50%. This wage increase not only aims to support workers but also plays a critical role in shaping the future of Türkiye's economic landscape.
