Turkey's government on Tuesday, May 22, announced a pay deal with public sector workers that compromises on its initial aim of imposing a pay freeze in the first half of this year.
The deal may have averted the danger of widespread protests by more than 400,000 public sector workers but does not fully provide the stern spending cuts Turkey has promised the IMF in return for a crisis loan package of some $15.7 billion.
Minister Mehmet Kececiler said the deal gave the workers a notional 15 percent rise in the first six months of 2001 but the extra money will not actually be paid until February 2002. The rise in the base salary will, however, be taken into account as a base for calculating any subsequent six-monthly pay rises.
The government had sought to keep the base salaries of public sector workers frozen but to compensate them with a one-off cash payment early next year.
Economy Minister Kemal Dervis, who drafted the pledges of spending cuts to the IMF, welcomed the pay deal. "May it be for the best. The solution to all these problems is rapid growth," Dervis told reporters at the announcement of the deal.
Selim Cevikel, Head of Research, at Credit Lyonnais in Istanbul, said the government had compromised to some extent. "It looks like the government gave in somewhat," he said, adding that the government had secured important points too.
Under the deal agreed on Tuesday the government has made sure the wage rise will not filter through to inflation until at least the second half of the year.
The wage talks were seen as a test of the government's resolve to maintain a strict policy on spending in accordance with a new economic program designed to end the crisis.
Turkey's late-February financial crisis has cut around 40 percent off the value of the lira currency and sparked inflation expected to reach more than 50 percent by the end of the year.
Annual wholesale inflation already topped 50 percent in April as the devaluation sparked sharp price rises in fuel and other imported goods.
The unions had sought a pay rise of as much as 30 percent in the first half to compensate for inflation and for the fact that last year's pay rises were linked to inflation targets that the government failed to meet.
The government managed to limit the hikes to 15 percent in the first and second half of this year, followed by 10 percent rises in the first and second half of next year.
If inflation is more than that, the government will make up 80-100 percent of the difference in 2002 under the deal. The unions had been demanding any difference be fully made up by the government.
"Turk Is (the country's biggest confederation of labor groups) has shown a great responsibility and they have ensured that workers will get their rights," Prime Minister Bulent Ecevit told reporters as the deal was announced. "They have taken into account the condition that Turkey is in," he said. ― (Reuters, Ankara)
By Orhan Coskun
© Reuters 2001
© 2001 Mena Report (www.menareport.com)