Tur­key looks to ease bur­den of $9.2bn min­i­mum wage hike

Kuwait Times - - BUSINESS -

IS­TAN­BUL/ANKARA: Tur­key is look­ing to help smaller com­pa­nies shoul­der a planned 30 per­cent in­crease in the min­i­mum wage, the econ­omy min­is­ter and of­fi­cials said, af­ter the tex­tile in­dus­try warned the hike could force cloth­ing com­pa­nies to move abroad. In the run-up to the Nov. 1 elec­tion, the rul­ing AK Party made the pledge to lift the net min­i­mum wage to 1,300 lira ($454) a month, from 1,000 lira now, aim­ing to win over the roughly 5 mil­lion min­i­mum wage earn­ers strug­gling to make ends meet.

The planned hike is due to go into ef­fect next year and could im­pact about a fifth of the labour force, cost­ing the pri­vate sec­tor an es­ti­mated $9.2 bil­lion. Crit­ics, in­clud­ing busi­ness own­ers and econ­o­mists, say it will stoke in­fla­tion, hurt com­pet­i­tive­ness and ul­ti­mately lead to job cuts. The AK Party, which re­gained sin­gle-party rule in the elec­tion, is try­ing to re­tain its pop­ulist ap­peal while con­vinc­ing in­vestors it is se­ri­ous about fis­cal dis­ci­pline.

“We think that small com­pa­nies with 10-300 employees will be af­fected much more by this,” Econ­omy Min­is­ter Ni­hat Zey­bekci told re­porters yes­ter­day. “There will be a shar­ing to lessen the bur­den. Our gov­ern­ment is work­ing on this.”

Prime Min­is­ter Ah­met Davu­to­glu has tasked of­fi­cials to look into ways to lessen the im­pact on smaller com­pa­nies, in­clud­ing tax cuts and low­er­ing what com­pa­nies pay in so­cial se­cu­rity pre­mi­ums for work­ers, two gov­ern­ment of­fi­cials told Reuters this week. Ear­lier in the week Davu­to­glu met with busi­ness lead­ers, who had called for struc­tural re­forms to im­prove the in­vest­ment cli­mate, one of the of­fi­cials said. “Con­cern was ex­pressed about the prob­lems which the min­i­mum wage hike might cre­ate for SMEs,” the of­fi­cial said. “Work will be con­ducted on what kind of bur­den the pub­lic sec­tor might be able to take.” De­spite the crit­i­cism, Davu­to­glu will not con­sider step­ping back from the wage hike, the sec­ond of­fi­cial said.

CLOTH­ING IN­DUS­TRY The stark­est warn­ing so far has come from the head of Tur­key’s cloth­ing ex­porters as­so­ci­a­tion, who told Reuters in an in­ter­view this week that pro­duc­tion of tex­tiles and ready-towear cloth­ing could move abroad if the in­dus­try is forced to foot the bill alone. “If the bur­den of the min­i­mum wage in­crease falls on the in­dus­try, that it will take us back­wards and I think many of our firms will flee abroad,” said Hik­met Tan­riverdi, chair­man of the Is­tan­bul Ready­wear and Gar­ments’ Ex­porters Union (IHKIB), whose mem­bers ac­count for 75 per­cent of Tur­key’s cloth­ing ex­ports. — Reuters

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.