Arab Times

Turkey to lift minimum wage by 30 pct, stoking inflation fears

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ANKARA, Nov 11, (RTRS): Turkey’s minimum monthly wage will rise by 30 percent next year, a long-serving former labour minister said on Wednesday, a move likely to fuel already high inflation and aggravate concerns about how the new government will manage the economy.

Sharp falls in the lira currency and a slowing economy have this year hit the pockets of millions of Turks and heaped pressure on prices.

Faruk Celik, minister in Turkey’s preJune government and the country’s dominant figure on labour issues, said the new net wage of 1,300 lira ($450) would come into effect at the start of 2016.

More than a third of Turkey’s 30 millionstr­ong labour force is paid the minimum wage, meaning a hike of that scale would have a significan­t effect on inflation that, at 7.58 pct, is currently running well above the central bank’s target of 5 pct.

“Do not underestim­ate the importance of (this),” Bank of America Merrill Lynch said in a note to clients.

“Given that service price inflation is already high and sticky, the sharp increase in the minimum wage would not only hurt companies’ competitiv­eness, but also push CPI inflation higher.”

Lifting the minimum wage was one of the campaign pledges of the AK Party that swept back into power in national elections on Nov 1 with nearly 50 percent of the vote, after losing its majority in the previous ballot in June.

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