The recent increase in the minimum wage has fallen short of expectations, with decisions reached during the recent Minimum Wage Commission meeting disappointing both workers and employers.
The Minimum Wage Commission, composed of representatives from the government, workers and employers, announced on Tuesday that the new minimum wage will be set at a monthly minimum of TL 796.50 starting January 2011. Minimum wage earners will be earning a net income of TL 629.96 after taxes on a monthly basis.
The commission also said the second half of the year will see the gross minimum wage increase to TL 837, making the take-home income for minimum wage workers TL 655.57. The current monthly minimum wage is TL 599.12. The current increase will be enough to buy an extra egg a day or 11 grams meat.
Experts suggest minimum wage should differ regionally to better match various costs of living and that it should be exempt from all taxes, which they say further enlarge the informal economy in Turkey while also making life much more difficult for the low-income bracket
Experts underline that the problem is structural and offer solutions, such as introducing regional minimum wages and exempting salaries at the level of minimum wage from income taxes. Economist Cemil Ertem stated that minimum wage earners should be exempt from such taxes. “Income tax and other deductions, which are done in the name of the employer, are making minimum wages lower than they are.” Ertem also noted that the current system forces many employers into operating in the unregistered economy to avoid paying higher taxes.
“These tax burdens are also one of the reasons for high unemployment and the informal economy. Some employers are not registering their workers in order to avoid paying taxes. But if there are tax exemptions for minimum wage salaries, incomes in general will be increased and more indirect taxes will be paid and it will not create burden for the budget,” Ertem told Today's Zaman.
Another economist, Professor Mehmet Altan, pointed out that tax exemptions might not be enough to solve the problem since it is also a structural issue, adding that regional minimum wage implementations should also be considered. “The minimum wage is very important for Turkey because 60 percent of the workforce is unskilled. We are facing the problem of a lack of skilled workers. In the developed countries the minimum wage is not a big issue because workers over there have skills and are making more than minimum wage,” he told Today's Zaman.
Members of a workers union who protested a minimum wage raise in front of the Ministry of Labor and Social Security in Ankara were detained by police officers on Thursday.
Ertem argued that the minimum wage should be determined in accordance with the poverty line. For example, he said, in a family of four, even if all the members are working for minimum wage, it is impossible for them to earn enough to live at the level of the poverty line. The Turkish Statistics Institute (TurkStat) was asked to conduct a survey on what the minimum wage should be for one person in order for them to have all their basic needs met. According to TurkStat's survey, the minimum wage should be TL 900.90. The unions have long been asking that minimum wage be determined according to TurkStat's survey, but the increase in minimum wage has continuously remained way below the poverty line. There are around 4 million workers in Turkey who earn the minimum wage and on average each of them is responsible for caring for 2.7 persons, apart from themselves.
İsa Gök, who represented the Confederation of Turkish Labor Unions (Türk-İş) in the Minimum Wage Commission meeting, said the new limit is far from ensuring a living standard that is in accordance with human dignity. He also criticized the structure of the commission, saying it is undemocratic and decisions are made by the government and employers' representatives, while they, as representatives of the labor force, are not happy with the decisions made by the commission.
Ali Kemal Sayın from the Ministry of Labor confirmed that the new minimum wage was not decided through a consensus, but by a majority. “Despite all our efforts, unfortunately the representatives of the workers did not participate in making a decision. If they had not left the meeting early, perhaps there could have been a higher increase,” he said to reporters after the meeting.
Ali Nafiz Konuk, who represented the Turkish Confederation of Employers' Union (TİSK) in the commission meeting, stated that they did their best to determine the minimum wage. He added that they wanted the decision to be made through a consensus, but failed to do so, adding that the employers had made sacrifices in order to reach an agreement with the government.
An official who works for the employers union told Today's Zaman that employers were willing to give less, but agreed to pay more at the meeting. “If you look at the emerging markets, including Turkey, minimum wages in recent years have really increased, but since there is tax burden, this improvement is not really passed on to workers,” he argued, asking for anonymity because of the sensitivity of the issue.
“We need a radical change. The minimum wage should be exempt from income taxes. But the government needs taxes because the current tax system is based on indirect taxes and taxes collected from workers. The tax system is unfair,” he underlined.
Revealing details of the meeting at the commission, he also said employers were ready to accept a tax exemption for minimum wages, but then realized this would mean much more scrutiny and monitoring when it came to other tax payments, which was something they were not prepared to accept. Though officially there are around 4 million workers earning the minimum wage, many workers are actually earning more. Employers simply register them as minimum wage earners on the payrolls and pay extra in cash under the table to avoid taxes.
Other unions are advocating different methods for calculating the minimum wage. The Confederation of the Revolutionary Workers' Union (DİSK) argues that it should be determined in accordance with the poverty line, not in accordance with inflation. According to DİSK calculations, a worker earning minimum wage has to work 41 hours just to purchase a pair of shoes. The union also asked for the abolishment of the Minimum Wage Commission because, it argued, the commission is undemocratic. “The minimum wage should be determined through the collective bargaining process,” the union added.
It also pointed out that the increase in the minimum wage was only 85 kuruş on a daily basis, which is just enough to buy 18 grams of baby food or 185 grams of rice.