Around 300,000 SME workers lose jobs after Turkey’s minimum wage hike: Report

Hacer Boyacıoğlu - ANKARA

Following Turkey’s recent minimum wage hike, around 300,000 people working for small and medium-sized enterprises (SMEs) lost their jobs in January, according to a new report by the Economic Policy Research Foundation of Turkey (TEPAV). 

A total of 379,000 people lost their jobs in January, 76,000 of whom were women, according to the report. 
TEPAV’s research showed that around 78 percent of the drop in the number of registered workers was seen in SMEs. Their total registered employment fell to around 11 million in January from the previous month, marking a fall of around 294,000. 

The research also revealed that the total number of SMEs dropped by 30,000 to 1.7 million in the same period. 

“The real sector has faced serious problems over the past year. The rise in cash shortages and in applications for suspension of bankruptcy has shown this. The number of bad checks increased by 37 percent and the number of troubled loans rose by 31 percent over the past year. In addition to these problems, the recent minimum wage hike might also play a role in the employment figures for the beginning of the year,” said the TEPAV report. 

Turkey recently raised the minimum wage by 30 percent to 1,300 Turkish Liras for around 8.5 million workers. The government said it would cover 40 percent of the cost of a hike in the minimum wage for 8.5 million employees, which came into effect on the first day of 2016, but only for one year. 

Business leaders had warned that layoffs could begin and some facilities would be forced to be closed if the conditions were not eased.


Employment rises in only one province out of 81

The largest number of layoffs in January was seen in Turkey’s most populous province Istanbul with 63,000, according to the TEPAV report. Istanbul was followed by the capital Ankara, the Aegean province of İzmir, and the Mediterranean resort province of Antalya.
 
Out of 81 provinces across the country, the employment rate only rose in the southeastern province of Van compared to the previous month. 

There was also a drop in the number of registered tradesmen and farmers, according to the research. While the number of registered tradesmen fell by 25,000 to around 1.9 million in January compared to the previous month, the number of registered farmers also declined by 5,000 to 793,000.

In this period, only the number of public servants rose, by around 1,000, to 3.03 million. 

The number of people awaiting approval to receive employment benefits in January also rose by 38 percent compared to the same month of the previous year, according to the TEPAV report.