Articles

The effects of minimum wage increases on collective bargaining agreements

Introduction


In Turkey, the minimum wage is determined by a government-established commission for six-month
periods, which constitutes a significant measure for the evaluation of industrial costs. Nearly onethird
of the country's labour force is paid the minimum wage.
In Autumn 2015 the minimum wage became a political issue during the elections in Turkey. Both the
governing party and opposing parties committed to higher increases in the monthly minimum wage;
consequently, in early 2016 the minimum wage was raised by 30% (from TRY1,000 to TRY1,300).
The validity period for this rate is different from previous years: the 30% increase is an annual rate.
 

Burden on employers


The financial burden of the increase has fallen on employers. Considering the rate of increase, the
government provided a small monetary incentive to employers, although this could not fully relieve
the burden. Moreover, this incentive is valid only for 2016, which means that this year will serve
merely as a transitional period for employers. Government officials have stated that a further
minimum wage increase at similar rates is not expected for 2017, but also that the application period
of the government incentive will not be extended.
Recent wage and working condition restructurings, mass lay-offs and other types of reduction in
employment were mainly the result of the minimum wage increase, as employers – particularly
those in the mass production industries – have struggled with the added financial burden.

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First published by ILO (Employment and Benefits Newsletter) June 2016