Predictions for the 2021 minimum wage are being evaluated by various institutions and organizations. As the year draws to a close, millions of workers are wondering how much the minimum wage will increase. Below we summarize the likely minimum wage increase scenarios for 2021.
A Minimum Wage Increase Is Expected
The minimum wage increase is determined each year in December. The amount set by the Minimum Wage Determination Commission is eagerly anticipated for 2021 as well. The commission, which begins its work on December 1, will decide the minimum wage that will take effect in the new year. The commission includes representatives of workers, employers and the government. On the workers’ side, the union with the largest representation is TÜRK-İŞ, while on the employers’ side the Confederation of Turkish Employer Associations (TİSK) represents employers.
Within the commission’s decisions, the minimum wage showed increases of 30% in 2016, 7.9% in 2017, 14.2% in 2018, 26% in 2019 and 15% in 2020. Looking at CPI (consumer price index) changes year-on-year, inflation rose by 8% in 2015, 8.53% in 2016, 11% in 2017, 20% in 2018 and 11% in 2019. In past medium-term programs it was noted that wage increases did not always align with past inflation figures. Published medium-term plans emphasized that adjustments would be made according to inflation targets to preserve price stability. Therefore, inflation data play a major role in determining the 2021 minimum wage.
Minimum Wage Increase According to Scenarios
There are several scenarios for minimum wage increase rates. Each scenario is based on different institutional forecasts or programs and has its own probability. The first estimate follows the inflation target in the medium-term program, which projects inflation at 8% for 2021. Under this scenario, the minimum wage would increase by 8%, resulting in a gross minimum wage of 3,178 TRY and a net minimum wage of 2,510 TRY.
According to the Central Bank’s expectation surveys, the projected 2021 inflation is around 9.4%. With that increase, the gross minimum wage would be about 3,220 TRY and the net minimum wage about 2,542 TRY. If a 3-point “wage share” (refah payı) is added to the Central Bank’s 2021 inflation forecast, the combined rate reaches 12.4%, producing a gross minimum wage of approximately 3,308 TRY and a net minimum wage of around 2,612 TRY. If the Central Bank’s inflation forecast were 12.1% and a 3-point wage share were added, the resulting 15% increase would yield a gross minimum wage near 3,384 TRY and a net minimum wage around 2,673 TRY.
How Much Will the 2021 Minimum Wage Be?
The exact 2021 minimum wage amount will be decided in negotiations that begin at the start of December between worker and employer representatives and the government. These negotiations are expected to take inflation data into account, so a very large increase is unlikely. Based on likely inflation rates, the expected increase for 2021 is estimated to be roughly 150–200 TRY in net terms. Even if the increase exceeds that range, it is unlikely to surpass 250 TRY. Workers paid the minimum wage should not expect a dramatic rise in salaries. The negotiations typically conclude within a few weeks after they begin.