Turkey has announced a 30% increase in the monthly minimum wage, effective in 2025, rising to 22,104 liras ($627) from 17,002 liras. The move is seen as a positive step to combat one of the world’s highest inflation rates and shift away from populist policies. The increase will impact a significant portion of the labor force, as more than a third earn minimum wage.
The decision is expected to lead to a slowdown in price growth, with expectations of a decrease to 21% by the end of next year from the current rate of 47.1%. President Recep Tayyip Erdogan’s new team, including Finance Minister Mehmet Simsek and Central Bank Governor Fatih Karahan, has been working to repair the damage caused by unorthodox policies, including ultra-low rates. Despite efforts, officials are still struggling to convince local businesses and households that they can control prices and restore welfare. The central bank’s inflation forecasts may be complicated by the hike, making a potential first interest-rate cut since February 2023 more difficult.