ATO/Baran: Minimum Wage Increase Should Be Set at 25%
Foreks - Gürsel Baran, President of the Ankara Chamber of Commerce (ATO), expressed positive views regarding the minimum wage increase rate mentioned by Central Bank Governor Fatih Karahan during his meeting with investors in the United States. He stated, “Mr. Fatih Karahan conveyed that a minimum wage increase of around 25% would align with the 2025 inflation outlook during his discussions with investors in the United States. We believe that the increase in the minimum wage should be at this level. We are aware of the difficulties our workers face due to inflation. We understand what it means to struggle for a living. However, we also recognize the importance of keeping businesses afloat. We wish for a more substantial increase in the minimum wage; however, experience shows that such an increase translates to higher prices for everything, which prolongs the process of combating inflation. We need to bring inflation down to single-digit figures as soon as possible and return to the path of growth and development.”
The Ordinary Assembly Meeting of the Ankara Chamber of Commerce (ATO) was held with the participation of ATO Assembly Members, chaired by Assembly President Mustafa Deryal. During the meeting in the ATO Assembly Hall, Gürsel Baran provided information about the board's activities and assessed current economic developments.
Noting that the International Monetary Fund's report on the global economic outlook has revised Turkey's growth forecast down to 2.7%, Baran stated, “The report emphasized the necessity of a tight policy on interest rates to achieve inflation targets, and if necessary, increasing interest rates should be considered.” He also highlighted that the report recommended reducing energy imports to lower the current account deficit and placing more emphasis on renewable energy investments, while also pointing out the impact of the minimum wage increase on inflation.
As discussions about the minimum wage have arisen with the approach of the new year, Baran remarked, “Central Bank Governor Mr. Fatih Karahan indicated in his discussions with investors in the United States that a minimum wage increase of around 25% would be in line with the 2025 inflation outlook. We believe that the increase in the minimum wage should be at this level. We are aware of the difficulties faced by our working brothers due to inflation. We understand what it means to struggle for a living. However, we also know how important it is to keep businesses afloat. While we too desire a more significant increase in the minimum wage, the current applications have demonstrated that such increases lead to rising costs across the board, further extending the fight against inflation. We must act quickly to reduce inflation to single-digit figures and once again embark on a path of growth and development.”
Baran also drew attention to the recent discussions around tax peace and restructuring demands, stating that not paying taxes and failing to fulfill responsibilities towards the state should not be reasons for reconciliation. He said, “To date, there have been constant reconciliations with those who do not pay taxes. This has left those who regularly pay their taxes questioning themselves and the system. Not paying taxes and neglecting responsibilities to the state should not be grounds for reconciliation. When we talk about taxes, we are referring to the rights of the orphan whose feathers have yet to grow. We need to take responsibility for implementing the system we have established in order to lift our country out of poverty. Tax peace or restructuring will not lead us to prosperity; it will serve no purpose other than to hold us back.”
In his remarks on battling inflation and its effects on the real sector, Baran noted, “Although there has been some recovery in domestic demand as of October, high-interest rates are increasing financing costs. Currently, the interest rates on commercial loans hover around 55%. This is a significant concern for SMEs. Therefore, it is crucial to open the channels of credit in a controlled yet supportive manner, in line with the expectations of the production and trade sectors. Access to finance is key to increasing our production capacity, especially in major industrial and commercial centers like Ankara.”
Baran explained that high-interest rates restrict access to credit, negatively affecting the capacity to create jobs. He emphasized the importance of access to financing to maintain labor force balance and noted, “High interest rates can limit access to credit and thus adversely impact employment generation capacity. A slowdown in demand and a cooling economy brings the risk of increased unemployment. We reiterate the selective credit option that we, as the Ankara Chamber of Commerce, have long advocated for. We expect public banks to step in and alleviate financing troubles caused by high interest rates, and to provide more inclusive, labor-friendly, project and sector-based credit support to SMEs aligning with our growth objectives.”
Baran also addressed the 2025 budget, stating that the 562 billion lira support allocated to the real sector will help ease financing problems for businesses, improve cash flow, and encourage investments. He stressed that the support provided to tradespeople should also extend to individual businesses registered with the trade chambers. “We have previously stated, and we will continue to do so, that we do not find it fair that tradespeople and merchants in the same sector face differing costs in accessing finance. We expect the advantages given to tradesmen to also be offered to our chamber members.”
He further discussed the tax system, stating, “On the other hand, tax policies are another crucial topic highlighted in the budget. Approximately 28% of the projected budget revenue of 12 trillion 800 billion lira comes from the value-added tax (VAT); with the special consumption tax (SCT), this figure rises to 45%. Based on these estimates in the draft, when we account for other items, only about 30% of budget revenues in 2025 will be derived from direct taxes. The emphasis on indirect taxes in Turkey's tax system creates a significant burden on both households and businesses, leading to income inequality. Therefore, we believe that the share of direct taxes should be increased. Effectively combating the informal economy and expanding the tax base will enhance economic sustainability.”