Turkey Ends Speculation by Ruling Out Mid-Year Minimum Wage Hike

(Bloomberg) -- Turkey has definitively ruled out a mid-year raise on the minimum wage that markets are watching to gauge the government’s commitment to fighting inflation of 75%, one of the world’s highest rates.

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The country often increases salaries in early July and while there’s been speculation that wouldn’t happen this year, President Recep Tayyip Erdogan is yet to make an explicit announcement.

“There won’t be an increase,” Labor Minister Vedat Isikhan told reporters at the parliament in Ankara on Wednesday. “Our aim is to establish permanent welfare, not a temporary one.”

He suggested the next talks over salaries would take place in December.

Erdogan Wins Over Foreign Investors, But Turks Pay the Price

Since last year, the central bank has tried to restore price stability through aggressive interest-rate hikes and other forms of restrictive monetary policy.

While foreign investors have welcomed the moves and started re-entering Turkish markets after staying away for years because of ultra-low rates, many Turks are less enamored. Erdogan is facing growing discontent over the cost-of-living crisis. The main opposition Republican People’s Party, or CHP, has called on the government to increase the minimum wage.

The central bank aims to slow inflation to 38% by the end of the year and is due to hold its next rate-setting meeting on Thursday.

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