OPINION: Turkey’s malaise is low-quality growth

Summary:

Veteran Turkish columnist Taha Akyol argues that Türkiye’s deepening income squeeze, especially among pensioners and wage earners, is not a temporary problem but the result of decades of low-quality growth. Consumption-led expansion, weak productivity, and the erosion of science-based policy and the rule of law have left the country poorer in real terms despite headline growth figures. Without a decisive shift toward productivity, education, technology, and legal certainty, Akyol warns that Türkiye will remain trapped in a cycle of stagnation and social tension.

In an analysis that blends historical memory with hard economic data, Taha Akyol says Türkiye is once again living through a familiar moment of social strain, where wages and pensions lag far behind the cost of living and inflation fuels public anger.

Akyol recalls a slogan that echoed across the country in January 1991 during mass protests by coal miners in Zonguldak: “Çankaya şişmanı, işçi düşmanı!” The miners were demanding wage hikes exceeding 100%, targeting then-President Turgut Özal for resisting their demands. The episode, Akyol notes, was a reminder that periods of economic contraction and high inflation almost always translate into social unrest — a pattern seen not only in Türkiye but globally.

Today, he argues, the country is once again in such a period.

Pensions, wages, and a shrinking standard of living

A draft law currently before parliament proposes raising the minimum pension to 20,000 lira. Akyol dismisses the figure as wholly inadequate. Pensioners and minimum-wage workers, he writes, are effectively living on what even political leaders have described as “poverty wages.”

In large cities especially, surviving on a pension has become nearly impossible. “Living on a pension outside small towns — and certainly in major metropolitan areas — is nothing short of a miracle,” Akyol writes. The fact that even President Recep Tayyip Erdoğan, known for distributing economic “good news” from state resources, appears unable to materially improve pensioners’ conditions is, in Akyol’s view, a sign of how severe the problem has become.

A quarter century of drift

According to Akyol, the roots of today’s crisis lie in policy choices made over the past decade, particularly under the presidential system and the populist turn in economic management. But he also steps further back to underline how far the country has fallen relative to its own past.

In 2002, when the Justice and Development Party (AK Party) came to power in November, Türkiye was emerging from the devastating 2001 financial crisis. The economy at the time was still shaped by reforms introduced under then-economy minister Kemal Derviş, which had stabilized the system but also imposed painful austerity.

Even in that difficult year, Akyol notes, the average pension amounted to about 46% of per-capita national income. During the AK Party’s early, reform-oriented years, that ratio rose into the 50% range — figures often cited with pride by former economy minister Ali Babacan.

Today, the contrast is stark. By 2025, the ratio of average pension income to per-capita GDP has fallen to just 28.9%. For Akyol, this dramatic decline is not only a measure of pensioners’ hardship but also clear evidence of a profound deterioration in income distribution. “Income inequality in Türkiye is worse today than it was a quarter century ago,” he writes.

Growth without productivity

The government frequently points to economic growth figures as proof of success. Akyol does not dispute that the economy has expanded. His argument is that the quality of that growth has been poor.

He describes a model driven by consumption rather than productivity: flashy and often wasteful infrastructure projects, rent-seeking dynamics, debt-fuelled expansion, and credit-led consumption. In this framework, output rises, but efficiency does not.

Akyol cites the government’s own 11th Development Plan from 2019, which states that between 2014 and 2018, average growth of 4.9% was driven primarily by consumption, contributing 3 percentage points, while capital investment added 1.3 points and exports just 1 point. For Akyol, this admission explains many of Türkiye’s structural weaknesses.

Long-standing warnings ignored

The problem is not new. Akyol recalls warnings issued nearly a decade ago by Nobel laureate Daron Acemoğlu, who argued in 2016 that productivity growth in Türkiye was either zero or negative. Growth, Acemoğlu warned at the time, was being sustained by accelerating consumption rather than by investment or efficiency gains — an unsustainable path.

More recently, economist Ufuk Akçiğit echoed similar concerns. Writing in June 2025, Akçiğit said that economic indicators showed growth being driven largely by capital accumulation and labor input, with productivity contributing too little. Sustainable development, he stressed, depends fundamentally on productivity growth — and its absence explains why Türkiye seems to move “two steps forward, one step back.”

Akçiğit led the team behind the Türkiye Science Report and is widely regarded as one of the country’s most respected scholars, lending additional weight to his assessment.

Science, skills, and the rule of law

Akyol asks a pointed question: when was the last time senior government officials publicly discussed productivity with concrete data? As a journalist, he writes, he has not heard such a discussion.

Productivity growth, Akyol explains, means producing more output in the same amount of time. Achieving this requires investment in education, skilled labor, modern machinery, science and technology — and, crucially, a predictable and trustworthy legal system.

He offers a comparison: Vietnam, which has built a $137 billion information-technology export sector from scratch in just two decades. Türkiye, by contrast, believed that cutting interest rates by decree and flooding the economy with cheap credit would automatically boost investment and production. The results, Akyol argues, speak for themselves.

History repeating itself

Akyol draws a historical parallel with the early 1990s. In retrospect, he suggests, Turgut Özal was right to resist excessive wage increases. After his death, successive governments — including those led by Süleyman Demirel and Tansu Çiller — succumbed to populism, paving the way for the 1994 crisis.

Today’s dynamics, Akyol warns, look uncomfortably similar.

He concludes with a stark message: wages, pensions, and long-term prosperity rest on two fundamental pillars — science and the rule of law. The strength of these pillars ultimately determines the health of economic growth. Without them, headline expansion figures offer little comfort to citizens struggling to make ends meet.

PA Turkey intends to inform Turkey watchers with diverse views and opinions. Articles on our website may not necessarily represent the view of our editorial board or count as endorsement.

Follow our English YouTube channel (REAL TURKEY):
https://www.youtube.com/channel/UCKpFJB4GFiNkhmpVZQ_d9Rg

Twitter: @AtillaEng
Facebook: Real Turkey Channel: https://www.facebook.com/realturkeychannel/***