On 20 June 2023, the Minister of Labour and Social Security announced that the monthly minimum wage in Türkiye will be increased by a further 34% from 1 July 2023 in an effort to combat rising inflation.
The gross monthly minimum wage will be TRY 13,414 (EUR 521), which will be net TRY 11,402 (EUR 443) in the second half of 2023.
This significant change is expected to have both direct and indirect effects on employers and companies operating in the Turkish labour market such as the following:
- Increased labour costs: With the significant increase in the minimum wage, employers and companies will experience a direct impact on their labour costs. The revised minimum wage will require them to allocate additional financial resources to meet the increased salary requirements of their employees. It is imperative that employers to carefully evaluate their existing budgets and consider making the necessary adjustments to accommodate the new wage structure.
- Business operations and profitability: The impact of the minimum wage increase will vary across industries and sectors. Certain industries, which often rely on a significant number of low-wage workers, may experience a more pronounced impact. Employers in operating within these sectors should assess the potential impact on their profit margins, business operations, and pricing strategies. Employers may need to consider alternative measures to optimise operational efficiency, such as increasing productivity or exploring cost-saving initiatives.
- Regulatory compliance: Companies will need to ensure compliance with the updated minimum wage regulations to avoid legal consequences. It is essential that employers to review and revise their employment contracts, payroll systems, and relevant policies to accurately reflect the new wage requirements accurately. Failure to comply with the revised minimum wage could result in penalties, litigation and reputational damage..
Conclusion
Türkiye's decision to increase the minimum wage by 34% demonstrates the government's commitment to tackling inflation and improving the financial circumstances of its workforce. Employers and businesses should carefully consider the impact of this minimum wage increase on their operations, finances, and human resources, and ensure compliance with the updated regulations.
For more information on how we can assist your business in effectively navigate these changes and optimise your business strategies, please contact your CMS partner or local CMS expert: Dr. Döne Yalçın, Sinan Abra or İremgül Mansur.
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