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Turkey’s government will raise the minimum wage by almost half to ₺17,002 (€520) per month next year, to compensate for the skyrocketing inflation in the country, some 62% in November 2023. 

The sharp increase aims to help with the high cost of living and might appeal to voters before the nationwide municipal elections of March 2024.

The hike is twice the rate at the beginning of this year and marks a 49% rise from the adjustment made mid-year. In Turkey, roughly one-third of its 86 million population earns the minimum wage.

“We are pleased to once again fulfil our pledge to prevent our workers from being crushed by inflation,” said Labour Minister Vedat Işıkhan at a press conference.

Fighting inflation

However, this increase is expected to push further up the country’s staggering inflation. A currency crisis in late 2021 sparked Turkey’s most severe inflation in 25 years, with the lira depreciating around 35% against the dollar this year and continuing to persist.

To combat inflation and the currency crisis, the central bank has recently increased its benchmark rate to 42.5%, delivering its seventh interest rate hike in a row.

But the bank signalled that the rate hikes could soon end.

“The committee anticipates to complete the tightening cycle as soon as possible,” said the Monetary Policy Committee in a statement. “The monetary tightness will be maintained as long as needed to ensure sustained price stability.”

“There is much still to be done in taming inflation but the bond market is optimistic that Turkey is on the right track,” said Cagri Kutman, Turkish market specialist at KNG Securities to AP. 

Bartosz Sawicki, market analyst at Conotoxia fintech, added that the central bank was likely to complete its rate hikes next month at 45%.

“Consequently, the [central bank] is set to halt the tightening before the local elections in March.”

Additional sources • AP