- The 7% growth rate announced for the first quarter of 2021 was not reflected in wages!
- While labor payments increased by 16 percent, the sum of inflation and growth rates became 24.1 percent.
- While the share of labor payments in GDP decreased from 39 percent to 35.5 percent, capital incomes increased from 41.9 percent to 45.8 percent.
Turkish Statistical Institute (TÜİK) announced the results of the 1st Quarter of Periodic Gross Domestic Product (January-March 2021) on May 31, 2021. GDP increased by 7 percent year-on-year in the first quarter of 2021 compared to the same quarter of the previous year. However, the 7% growth in the first quarter of 2021 was not reflected in wage earners.
To understand this, it is necessary to consider the inflation and growth of the period together. Growth means real increase in goods and services in the economy. Compared to the sum of the growth rate and the inflation rate of the period, the increase in labor payments was quite limited. While labor payments increased by 16 percent annually, the sum of official inflation (17.1%) and growth (7 percent) rates was 24.1 percent. In other words, workers’ wages remained below inflation, let alone a share of growth. The fact that labor payments are limited in the face of inflation and growth rates shows that the increase in growth is not reflected on wage earners. In order to talk about the reflection of growth in wages, wages had to increase by at least 24.1 percent in general and 28.8 percent in industry (Chart 1).
The rates regarding labor payments in the bulletin of TURKSTAT, GDP for the 1st quarter of 2021 also show that the growth is not reflected in wages. According to the TURKSTAT bulletin, the share of labor (labor payments) in national income decreased from 39 percent to 35.5 percent in the first quarter of 2021 compared to the first quarter of 2020, while the share of net operating surplus was 45.8 percent from 41.9 percent in the same period. (Graph 2). Net operating surplus represents capital income. Thus, while capital incomes increased, labor payments decreased. While workers produced more, growth did not get a share.