Burden on employers
Impact on collective bargaining agreement negotiations
In Turkey, the minimum wage is determined by a government-established commission for six-month periods, which constitutes a significant measure for the evaluation of industrial costs. Nearly one-third of the country's labour force is paid the minimum wage.
In Autumn 2015 the minimum wage became a political issue during the elections in Turkey. Both the governing party and opposing parties committed to higher increases in the monthly minimum wage; consequently, in early 2016 the minimum wage was raised by 30% (from TRY1,000 to TRY1,300). The validity period for this rate is different from previous years: the 30% increase is an annual rate.
The financial burden of the increase has fallen on employers. Considering the rate of increase, the government provided a small monetary incentive to employers, although this could not fully relieve the burden. Moreover, this incentive is valid only for 2016, which means that this year will serve merely as a transitional period for employers. Government officials have stated that a further minimum wage increase at similar rates is not expected for 2017, but also that the application period of the government incentive will not be extended.
Recent wage and working condition restructurings, mass lay-offs and other types of reduction in employment were mainly the result of the minimum wage increase, as employers – particularly those in the mass production industries – have struggled with the added financial burden.
Impact on collective bargaining agreement negotiations
However, the increase has also led to unanticipated disputes and problems relating to the enforcement and negotiation of collective bargaining agreements. The predominant collective bargaining agreements mostly cover mass production industries and the minimum wage is used as a reference point in determining employees' salaries and benefits. Facing such a major increase in the minimum wage, some employers that were subject to collective bargaining agreements could not continue to honour the terms of such agreements. This was especially true of spare parts manufacturers in the automotive sector, many of which were of the opinion that they could not survive and compete with their Eastern European counterparts.
On the other hand, the trade unions were also unprepared and lacked contingency plans for such an unexpected development. One of the union leaders affiliated with DISK (the Confederation of Progressive Trade Unions of Turkey) described this matter as "a stone fallen on the trade unions".
Employees who were paid at or near the previous minimum wage were immediately affected by the wage increase, and in most cases employers did not object to the increase. However, most employees who were earning more than the minimum wage also expected to see a 30% wage increase and employers objected to this, which led to the trade unions intervening in employee-employer affairs. While the trade union directors acknowledged employer objections to employee demands for an across-the-board 30% pay rise – and stated that they would like to revise pending collective bargaining agreements accordingly – they must also remain sensitive to their relationships with their members.
In the meantime, a legal question has arisen as to whether trade unions are entitled to revise pending collective bargaining agreements. Under Turkish law, a trade union must obtain an authorisation letter from the Ministry of Labour in order to negotiate and sign a collective bargaining agreement on behalf of its members (ie, the employees). There is no legal mechanism explicitly stipulated in the law for interim term amendments to a collective bargaining agreement. However, Court of Appeal precedents from 2007 and 2014 give trade unions the legal option to sign amendment protocols in order to revise the terms of collective bargaining agreements.
Many trade unions (typically medium-sized unions) were initially reluctant to sign amendment protocols on the grounds that trade unions' ultimate mission is to protect employees against employers and provide them with the best working conditions. However, understanding the necessity and looking to examples in other sectors, all of the trade unions have finally come around to amending their protocols.
A noticeable change has also been observed in recent negotiations over the terms of new collective bargaining agreements: while trade unions previously tended to finalize agreements as quickly as possible and call for strikes in cases of disagreement, most trade unions are now undertaking negotiations as slowly as possible in order to monitor other collective bargaining agreement negotiations that can be used as a guide. However, one exception to this trend has been the tyre industry – the collective bargaining agreements of four tyre companies were finalised in early 2016, most likely to avoid disturbances among employees that would have otherwise been caused by the minimum wage increase. The remaining collective bargaining agreement negotiations took between three and four months to finalise, during which the trade unions managed to convince their members to sacrifice their expected raises for the year.
Because the collective bargaining agreements for 2016 were negotiated and executed under the influence of the increased minimum wage, the finalised terms and party commitments – as well as the overall approach taken to this year's collective bargaining agreement process – should not necessarily be considered predictive of future negotiations. The real effects will be felt in the forthcoming negotiations for 2017.
For further information on this topic please contact Tolga Danisman or Bige Göksel at Hergüner Bilgen Özeke by telephone (+90 212 310 1800) or email ([email protected] or [email protected]). The Hergüner Bilgen Özeke website can be accessed at www.herguner.av.tr.