Turkish minimum wage rise above inflation

ANKARA (Reuters) – Turkey’s government will raise minimum wages in 2008 by much more than its 4 percent inflation target for the year, it said yesterday. It will raise the minimum wage by 4 percent for the first half of 2008 and another 5 percent for the second half, Labor and Social Security Minister Faruk Celik said. The International Monetary Fund, which has a $10 billion loan deal with Turkey, has in the past suggested a lower minimum wage in order to encourage registration of workers in the informal sector and also help job creation. Business groups have also suggested different minimum wages for the country’s impoverished eastern regions and wealthier western parts. The government has rejected both suggestions fearing a backlash from trade unions, who say workers have hardly benefited from the economy’s strong growth and a national income which more than doubled in dollar terms in the last five years. The minimum wage, after tax, will be 435 lira ($369.7) a month for the first half of 2008 and 457 lira for the second half, Celik told a televised news conference. However, the hikes may not lead to major wage pressure in the near term because those minimum wage earners are a small percentage of the total labor force, said Yarkin Cebeci, an economist at JP Morgan Chase. «Although this is higher than the inflation target of 4 percent, we doubt that the central bank would be overly concerned mainly because the minimum wage is not a good proxy for average wages in Turkey,» Cebeci said.