TurkStat data revealed the increasing impoverishment in the face of high inflation. According to the analysis based on the said data, a minimum wage earner can allocate 69 liras per meal for food for his family of four. Here are the details…
While the policies aimed at austerity of wage earners and pensioners are gaining momentum with the discourse of ‘fiscal discipline’ in Turkey, the Household Consumption Expenditure data released today by the Turkish Statistical Institute (TurkStat) revealed how difficult the living conditions of retired and minimum wage earners have become in the high inflation environment.
According to an analysis of TurkStat’s Household Consumption Expenditure data, minimum wage earners can spend only 207 liras per day and 69 liras per meal on food for themselves and their families with their monthly income. Accordingly, the minimum wage earner can allocate 17.3 liras per person for each meal.
While President Recep Tayyip Erdoğan’s New Economy Model, which prioritizes growth over fighting inflation, has led to a serious deterioration in economic parameters from inflation to budget deficit, from broadly defined unemployment to poverty, the bitter prescription put forward to put the economy back on track was burdened on wage earners.
The last increase in the minimum wage was in January 2024. With the last increase, the minimum wage was raised to 17 thousand 2 liras. However, it was announced that this increase was made for the whole year and that there would be no inflation update in July. In the same period, the lowest pension was completed to 10 thousand liras. However, those who currently receive a monthly salary of 10 thousand liras will either benefit from the increase at lower rates or will not benefit at all, as the inflation difference payment to be made in July will be added to their root salaries.
Considering that both segments are in the lowest 20 percent income group, TurkStat’s consumption expenditure data reveal the gravity of the picture regarding purchasing power.
According to the results of TURKSTAT’s Household Budget Survey for 2023, the lowest 20 percent income group can allocate 36.6 percent of their income to food, health expenditures and non-alcoholic beverages, 29.2 percent to housing and rent, 8.8 percent to transportation, and 5.4 percent to furniture, household goods and home care services.
5 thousand liras left for rent and bills
According to DW Turkish calculations, a minimum wage earner with a non-working spouse and two children can allocate 6,223 liras from his monthly earnings for food and non-alcoholic beverages. Accordingly, the minimum wage earner has to cover the expenses of his/her spouse, himself/herself and his/her children with the 207 liras he/she can allocate daily for food.
TurkStat data also show that minimum wage earners live in unhealthy buildings with few urban facilities. According to data from the real estate appraisal platform Endeksa, as of June 2024, the average house rent price in Turkey is 18,328 liras. Despite this, the minimum wage earner can allocate 4 thousand 965 liras for housing and rent expenses. This figure includes the materials needed for the maintenance and repair of the house, bills such as water, electricity, natural gas.
The minimum wage earner can allocate 1770 liras per month for rent and 3195 liras per month for housing maintenance-repair costs and bills. From the minimum wage earner’s earnings, 1496 lira goes to transportation expenses and 918 lira to furniture, household goods and household maintenance services.
Health expenditures decreased
The TurkStat data were also compared with the results of the previous budget survey.
Accordingly, the lowest income group had to spend more on food and non-alcoholic beverages in 2023 than in 2022, while spending on health, personal care, entertainment, sports and culture, restaurants and accommodation decreased.
According to TURKSTAT data, annual inflation rose to 75 percent as of May, while the annual change in the food and non-alcoholic beverages group is above 70 percent. As the increase in the minimum wage has lagged behind the high increases in food prices, the share of the budget allocated to this area has also increased.
According to TURKSTAT data, the share of the lowest 20 percent income group allocated to health expenditures last year remained at 1.9 percent. While the lowest income group could not allocate even 1 percent (0.8 percent) of its income to entertainment, sports and culture, the share allocated to education is almost zero with 0.2 percent.
Only 17 liras per month for education
Accordingly, a minimum wage earner supporting a family of four can allocate 323 liras a month for health expenditures, while the monthly health expenditure per person remains at 81 liras. While four people can spend 136 liras on entertainment, sports and culture in a month, the amount that can be spent on education per child is only 17 liras per month.
This group can allocate 816 liras for clothing and footwear, 578 liras for information and communication, 544 liras for alcoholic beverages, tobacco and tobacco products, 510 liras for restaurants and accommodation services, 425 liras for personal care, social protection and various goods and services, and 51 liras for insurance and financial services.
There is a 5 and a half times difference between the two segments
There is a five and a half times difference between the consumption expenditures of the lowest 20 percent income group and the highest 20 percent income group.
While the poorest 20 percent could spend an average of 8,827 liras per month last year, this figure increased to 48,830 liras for the richest 20 percent.
TurkStat data also show that average consumption expenditure decreases after the age of 60, which is the retirement period. Accordingly, while the average expenditure in the 30-59 age range is 27 thousand 484 liras, this figure decreases to 17 thousand 720 liras after the age of 60.
According to the activity status of the head of the household, the average consumption expenditure in a family where the head of the household is retired in 2023 is 21 thousand 451 liras. However, according to the Social Security Institution data, more than half of the pensioners currently have a root pension of less than 10 thousand liras.
41 lira per meal for pensioners
Last year, a diluted increase was made to the lowest pension before the elections, and the pension of pensioners with a root pension of 5 thousand 500 liras was increased to 7 thousand 500 liras. Although pensioners received a six-month inflation difference of 25 percent in July 2023, since this increase rate was applied to the root pensions, the pensions of those whose root pension was 6 thousand liras and below remained at 7 thousand 500 liras.
According to the current data, a pensioner who receives the lowest pension and his/her family can allocate 3,660 liras of his/her income to food and non-alcoholic beverage expenditures, while this figure corresponds to 122 liras per day and 41 liras per meal.
The total amount that the pensioner can allocate for housing and rent expenses remains at 2 thousand 920 liras. The share of rent in this figure is 1041 liras. The share that this segment allocates for health expenditures falls to 190 liras per month.
