Collapse – the Economic Situation in Turkey

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By Ibrahim Ipek

According to the official statistics published by TURKSTAT, inflation hovered around 70% in April 2022. But this information is misleading. With all kinds of calculation games, the inflation rate is shown in two digits. The actual inflation is 3 digits.

 As for the employment rate, it is 45% on average, and unemployment has been around 13% since January. Turkey here competes with the most miserable colonies in the world! A dreadful unemployment rate, a wallet-gnawing inflation, ridiculous wage rises. Wages of civil servants were raised by 30.5% in 2022, while there is a 28% increase in workers’ wages.

Even according to official inflation data, these rises are insufficient and there is a collapse in the standard of living. When this situation combined with inflation in rents, a serious situation of misery emerged. Students who could not find a place to reside had to sleep on campus and in the streets.

The currency crisis that Turkey has been in since 2008 is getting deeper and deeper. Since 2008, the Turkish Lira has lost 93% of its value against the Dollar. The country’s economy has been shrinking in dollar terms since 2013. Foreign Trade Deficit and Foreign Debt are constantly growing. As of January 2022, imports increased by 54.2%, but exports grew by only 17.2%. As of 31 December 2021, External Debt Stock was 441.1 Billion Dollars, the ratio of this stock to national income is 59.4%.

Under these conditions, imported products become more expensive, and agriculture and similar sectors that rely on imported products such as fuel and fertilizers are driven into bankruptcy. Turkey’s middle class is being liquidated. This year, with the increase in electricity price between 50% and 125%, the costs of small producers and tradesmen have doubled. The gross minimum wage for engineers and architects was determined as 7,850 TL by the Board of Directors of TMMOB.

In general, the gross minimum wage in Turkey is 5,004 TL. It should be noted that these numbers are gross. There is a 15% income tax in this country. The net minimum wage is therefore 4,253 lira (281.64 dollars). The net minimum wage for engineers and architects is 6,672 Lira (441.83 Dollars). There is only a $160.2 gap between the wages of an engineer and an unskilled worker, and the gap is closing! While the unemployment rate of university graduates is 12.7%, this rate is 12.6% for those without higher education, almost equal to each other.

Going to college no longer brings security or a good income. The CBRT implements a high interest rate policy (14%). In 2022, 240 Billion 383 Million 662 Thousand Liras were allocated to interest payments by the government. The money allocated for interest is growing relatively in the national budget! A large share of the economic growth is finance-based, virtual in nature as a product of high interest rates. Growth in productive sectors of the economy is minimal. This situation is preparing a financial crisis. The moneylenders win, the people lose.

There are 10 million or more refugees in the country. Turkish industry is based on the unlimited exploitation of these refugees, increasing the profit rate over refugees. The people of Turkey do not want refugees because they have reduced wages. Every phenomenon here is a direct consequence of the Law of Profitability and imperialist plunder. There have been massive privatizations, even in infrastructure related sectors (like electric transmission). This resulted in monopoly prices, insufficient investment rates, neglected maintenance and nationwide blackouts (directly affecting economic growth). Still, banking is majority state controlled in Turkey. At least we still have that!

Photo taken in the Kagithane district of Istanbul. Credit :

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