Wage hikes instantly eroded by inflation, as poverty set to increase

Turkey’s poverty threshold for a family of four rose to 37,974 liras in July, data from the Confederation of Turkish Trade Unions (Türk-İş) revealed. The hunger threshold reached 11,658 liras for the same month, surpassing the minimum wage (11,402 liras) in the first month of its hike, reported Duvar English. In addition to soaring inflation, led by imported goods and food, a recent spate of tax hikes, too, are hurting the budgets of low-income earners, leading to more families falling through the safety net.

 

Turkey’s poverty threshold increased to 37,974 liras in July, more than three times the minimum wage (11,402 liras), data from the Confederation of Turkish Trade Unions (Türk-İş) showed.  Turk-Is data is considered the most reliable indicator of poverty and hunger thresholds among Turkish economists.

 

The poverty threshold indicates the money needed for a family of four to feed itself sufficiently and healthily, and it also covers the expenditures on basic necessities such as clothing, rent, electricity, water, transportation, education and health.

 

The hunger threshold, which indicates the minimum amount of money needed to save a four-member family from starvation a month, became 11,658 liras in July. Accordingly, the hunger threshold surpassed the minimum wage in the first month of its hike.

The minimum wage was raised by some 34% to 11,402 lira ($423) for the second half of 2023.

 

According to Türk-İş, the increase in the inflation in the kitchen expenses was 12.38 percent monthly and 70.44 percent annually.

 

The cost of living for a single employee reached 15,123 lira.

 

The Turkish Statistical Institute (TÜİK) reported an annual inflation rate of 38.21 percent in June, whereas the independent inflation group ENAG put the figure at 108.58 percent.

 

Turkey’s Central Bank projected 60% CPI by year-end, which will decelerlate to 33% by end-2024. However, with Erdogan forbidding tight monetary policy, it is not clear how the target will be reached.

Millions of Turks cannot make ends meet due to soaring cost of living.  All wages, and state salaries and pensions will be increased by the turn of the year as per the statutory requirement that indexes them to past inflation, which could exceed 30% in 2H2023. Turkish household increase consumption in February and July,   when pay hikes are enacted, but suffer from falling standards for the rest of the year.  Even basic needs are sometimes made by running up credit balances, where the monthly interest rate has recently been raised to ca. 3%, squeezing the poor even more.

 

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