Jakarta, CNBC Indonesia – Turkey will increase its minimum wage by 50% to 4,250 lira or around IDR 3.8 million per month next year. President Tayyip Erdogan said this step was taken to cope with the fall in the currency and the spike in inflation, Thursday (16/12/2021).
The dollar value of the 2021 minimum wage, around 2,825 lira (Rp 2.5 million) per month, has fallen to US$ 185 (Rp 2.6 million) from US$ 380 (Rp 5.4 million) at the start of the year due to the currency crisis. money. Second incident in Turkey in four years.
Erdogan’s unorthodox policy of cutting interest rates in the face of rising prices has sparked a sell-off in the lira. Since the beginning of last month alone, the lira is down 40%.
“With this increase, I believe that we have shown our determination to protect our employees from destruction in the face of rising prices,” Erdogan said, adding wages would be the highest ever. Reuters. Erdogan said the government would also raise the minimum wage tax to ease the burden on employers.
Inflation jumped above 21% last month and is expected to hit 30% next year. Largely due to a currency decline, which pushes up import prices.
Erdogan was speaking after the central bank again cut its policy rate, by 100 basis points to 14 percent, as part of its new economic program emphasizing exports, credit and growth ahead of the general election in 2023. The lira fell as much as 5.6% to a record low of 15 .6890 versus the dollar after the rate cut.
“Our currency is known, and it is the lira, and we will not let it be swallowed up,” Erdogan said. “We are determined to end the uncertainty that has arisen due to exchange rate fluctuations and exorbitant price increases as soon as possible.”
The collapse of the lira has turned household budgets and plans upside down, while soaring prices overall have drawn backlash. Turks have seen their income eroded since the central bank, under pressure from Erdogan, began cutting interest rates in September.
Erdogan said stability would be ensured by new measures in the coming days. But did not specify what steps he would take.
(tfa/tfa)
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