New minimum wage 'will cost Turkish firms $10bn'

ISTANBUL

Istanbul-based Independent Industrialists' and Businessmen's Association, or MUSIAD, has expressed its concern over a possible rise in Turkey's monthly minimum wage and called on the government to "share the burden".

“Companies will have to make an additional 30 billion Turkish lira [$10 billion] payment [per year] if the government decides to raise the minimum wage to 1,300 Turkish liras [$447],” Nail Olpak, the chairman of MUSIAD, said.

The current minimum wage per month is 1,000 Turkish liras ($344).

Olpak stressed that while the minimum wage should be at the level of a livable standard for workers, it should also be “sustainable” for companies.

He made the remark during a briefing detailing the association’s expectations from the new Turkish government.

The ruling Justice and Development party (AK Party), which won enough seats in the Turkish parliament to form a single-party government, promised, prior to the Nov.1 general election, to increase the minimum wage.

During his unveiling of the new government’s program at the Turkish parliament late on Wednesday, Prime Minister Ahmet Davutoglu said he stood behind the party’s pledge to hike the minimum wage.

Following the election, Deputy Prime Minister Mehmet Simsek said a commitment to increase the minimum wage would be put into practice as promised.

There are 14 million workers in Turkey, according to Olpak – 40 percent of these earn minimum wage. 

Olpak said a minimum-wage hike would hurt SMEs more as these companies employ 80 percent of those workers.

The Turkish business leader warned that the wage hike would increase the “shadow economy” and companies would have to lay off many employees.

“I hope the government will approach this issue reasonably,” he stated.