Turkey’s government plans to skip a mid-year increase in the minimum wage, people with knowledge of the matter told Bloomberg, resisting political pressure to alleviate the rising cost of living.
Such a move would likely be viewed positively by investors, who see restrictions on salaries as a means to gauge the willingness of Turkish officials to tackle persistently high inflation.
While policymakers are aligned on skipping the increase, President Recep Tayyip Erdoğan will make the final decision, the people said, asking not to be identified as the outcome hasn’t been set.
The Labor Ministry declined to comment.
Turkey’s annual inflation rate was 35.4 percent in May, and monetary policy officials are targeting 24 percent at the end of the year.
Opting out of a mid-year increase means “one of the risk factors for inflation has been removed,” said Tufan Deriner, a managing partner at asset manager Istanbul Portfoy. He said this was their base case, along with markets. “Therefore, this will have a limited positive impact.”
In the past Erdoğan’s government has boosted salaries to manage the fallout from high inflation. That served to fuel domestic demand and complicated the central bank’s efforts to cool off prices.
More than a third of the population are minimum-wage earners, and the figure serves as a benchmark for determining other salaries.
The net monthly minimum wage was determined as 22,104 lira at the start of year, equivalent to $626. Its value has eroded with inflation and currency depreciation and is now worth $554.
Özgür Özel, the chairman of Turkey’s main opposition Republican People’s Party (CHP), has argued for salaries to be raised to 30,000 lira, or $752. The Confederation of Progressive Trade Unions of Turkey (DISK) has said salaries should be determined by actual prices and not projected inflation.
“Because of high inflation in 2025, wages and the minimum wage have rapidly evolved,” it said in a statement earlier this week.
The government skipped an interim raise last year after dramatic boosts in prior years. While that was welcomed by foreign investors, it fueled discontent among millions of Turks.