EXTENDED SUMMARY

One of the most essential factors in analyzing the macroeconomic performance of a relevant economy is the historical growth of wages and salaries. An economy that does not sustainably raise real wages and salaries by increasing employment in the long run cannot be regarded as successful. The evolution of real wages and salaries in Turkish economy from 1970 to 2021 is examined in this study using a variety of indicators.

The position of workers in the labor market and their share of GDP are examined in the first part of the study. Such figures illustrate that Turkish labor market has changed dramatically during the last three decades. Specifically, although the proportion of employees in employment with wages was 40.39 percent in 1988, it climbed up to 70.5 percent in 2021. On the other hand, the proportion of entrepreneurs, self-employed workers, and unpaid family workers in overall employment fell from 59.61 percent in 1988 to 29.5 percent in 2021. These statistics reveal that due to changing conditions and increased competition, small companies and agriculture, which provide a large portion of employment opportunities are rapidly downsizing and that proletarianization is on the rise. Furthermore, the data display that the process of proletarianization is stronger in the post-2003 AKP period than in the 1990s. On the other hand, it has been observed that the share of labor income in national income has fluctuated throughout the last forty years depending on the conjuncture, but has remained consistent in the long term when compared to the base year. Actually, while the share of labor incomes in GDP was 27 percent in 1980, when the economy and society were in crisis, it remained at 27 percent in 2021, when the economy and society were struck in crisis once again. Furthermore, it should be noted that the share of labor income in GDP fell from 31.99 percent to 27.04 percent in the post-2016 era, as the Turkish economy’s political and economic crises exacerbated. The study’s data set reveal that two elements, namely; the economic and the political, are particularly essential to the creation of real wage cycles. That is to say, historical data show that economic processes like currency crises and inflation, as well as political tendencies like the decline of democracy and authoritarianism, are determinants of real wage declines.

In the second part, which examines the development of labor productivity and real wages; it is indicated that although worker productivity in the Turkish economy increased 4.3 times in 2020 compared to the base year of 1970, real wages fluctuated according to the conjuncture in the same period, but never reached the levels pertaining to 1970. These statistics confirm that in the long run employees are unable to reap the benefits of increasing productivity and growth. The widening gap between productivity and real wages since 1970 shows that in the long run, growth is based on low wages, and that even the political climate, social struggles, and processes that tend to raise real wages are inevitably interrupted by currency crises, inflation, and/or authoritarian tendencies. In addition, it has been demonstrated in this section that in time, the salaries of minimum wage workers and civil servants in Turkey have dropped in comparison to the per capita income. In fact, in 1978, the gross minimum wage was 6% higher than the country’s per capita income, but by 2020, the gross minimum salary had dropped to 58 percent of the country’s per capita income. On the other hand, whereas civil servants’ average yearly wage was more than twice the country’s per capita income in 1975, it has dropped to 86 percent of the country’s per capita income in 2020. All of these findings indicate that the recent growth process of Turkish economy does not have a dynamic that favors salary and wage incomes.

The final section of this study which compares income convergence patterns in the labor sector, illustrates that a process has occurred in the local labour market against employees who earn more than the minimum wage, owing in part to the 2001 crisis and the policies implemented in its aftermath. Given that the majority of workers earning more than the minimum wage were well-educated and white-collar, the economic rationale for Turkey’s increasing human capital flight in recent years, particularly the tendency of higher education graduates to seek their future overseas, becomes all the more evident.

According to the findings of the study, processes in which long-term social conflicts are powerful and the political climate is relatively democratic and favorable to workers contribute to the improvement of labor purchasing power and a more equitable distribution of income. On the contrary, it has been shown that authoritarian tendencies, currency crises and high inflation processes impoverish the workforce, cause unequal income distribution and increase economic-social polarization. This finding also highlights what needs to be done on an economic and political level to improve wage earners’ purchasing power and living standards. Economic policies should be established and implemented in such a way that they will establish long-term exchange rate and price stability, in order to raise the share of workers in the gross domestic product. In the political phase, there is a need for democratization, which entails avoiding using state force to suppress worker’s struggles for rights, increasing the rate of unionization, and increasing the power of labor demands to influence political processes.