Turkey raises low wages like the destruction of the lira, rising prices lead to difficulties | Business and Economic Affairs

Turkey is raising its minimum wage by 50 percent from next year.

Turkey is raising its minimum wage by 50 percent from next year, while families across the country suffer from high inflation and lira.

President Recep Tayyip Erdogan made the announcement on Thursday at a press conference, saying the change would bring the biggest interest in 50 years.

The increase is pushing for a minimum wage in Turkey from 2,826 lira ($ 182) per month to 4,250 lira ($ 275) and will directly affect about 6 million workers.

“We are determined to address the uncertainties that have arisen as a result of the recent fluctuations in the exchange rate and the sharp rise in inflation,” Erdogan said. “We know the future of this country together with men and women, young and old, workers and employers.”

Erdogan also said that the government will reduce its revenue and reduce taxes on minimum wage.

The economy of the Turkish people has deteriorated this year due to the sharp rise and fall of the lira which has caused the Turkish currency to lose more than half of its value against the US dollar since early January.

The price of inflation in the country rose 21 percent last month – more than four times the size of Turkey’s central bank. But Turkish political analysts and some economists say the prices are lower.

“According to [independent inflation research group] The rise in ENAG prices is about 60 percent, so a small increase in pay rises in line with inflation, “Harun Ozturkler, professor of economics at Kırıkkale University, told Al Jazeera. staff have prioritized.

The Lira depreciated on Thursday as the Turkish central bank cut interest rates by 14 percent – the fifth dividend since September.

Reducing interest rates on rising inflation is in stark contrast to many economies because lowering the borrowing rate reduces inflation.

But Erdogan insists that low interest rates will offset inflation, boost economic growth, export electricity and create jobs. Over the past two years, he has fired three Central Bank of the Republic of Turkey (CBRT) governors. He also said that foreigners and their allies were destroying Turkey’s economy.

“President Erdogan will continue to tell CBRT critics to test his unconventional views that lower interest rates are needed to lower interest rates,” said Jason Tuvey, a market economist at Capital Economics in a letter to clients on Thursday, adding that. “This money is about to do well for the year since 1995!”

The central bank, which has resold several dollars in recent weeks to meet the call, indicated in a statement that the downturn was already over.

With the elections to be held in 2023, Erdogan had said on Thursday that he would continue to press for low borrowing.

But economists believe Thursday they announced the minimum wage raised before the election.

“It also shows that the government is planning to go to the polls sometime in 2022,” Ozturkler told Al Jazeera. “One of the most important factors that influences the choice of Turkish voters is low pay, and the government is aware of it.”