Türkiye’s Labor Market: Wages Surge Amidst shifting Economy
ANKARA – February 22, 2024 – The Turkish labor market is undergoing a period of notable transition. Economic data from the first quarter of 2025 reveals ample wage growth across various sectors,especially in trade-services and construction,coupled with a slight contraction in overall employment numbers,as shown by the Turkish Statistical Institute. This shift warrants close inspection, and also a deeper understanding of the potential outcomes from these trends.
Türkiye’s Labor Market: Wages Surge Amidst Shifting Economic Landscape
Türkiye’s labor market presented a mixed bag of economic signals in the first quarter of 2025. Data from the Turkish Statistical Institute (TurkStat) reveals considerable annual wage increases and a rise in working hours, juxtaposed against a slight quarterly dip in overall employment.
Wage growth: A Deep Dive
The gross wages-salaries index, encompassing industry, construction, and trade-services, experienced a meaningful surge. The index soared by 44.7% year-on-year.
This growth was not uniform across sectors.
- Trade-Services: Led the pack with a 49.1% increase.
- Construction: Followed closely with a 43.3% rise.
- Industry: Showed a more moderate, but still substantial, 38.5% increase.
Quarterly data reinforced this trend, indicating a 10.5% rise compared to the previous quarter, with construction, trade-services, and industry contributing 12.4%, 11.7%, and 8.4% respectively.
Hours Worked: Sector-Specific Dynamics
The hours worked index also reflected growth, albeit at a more modest pace. Annually, the index grew by 2.4%.
- Trade-Services: Drove the gains with a 4.2% increase.
- Construction: Contributed a 2.1% rise.
- Industry: Experienced a slight decline of 0.6%.
On a quarterly basis, hours worked rose by 1.6%,with construction,trade-services,and industry contributing 2.4%, 1.8%, and 0.9% respectively.
Employment: A Slight Contraction
While annual figures showed a modest 1.4% increase in the employment index, quarterly data revealed a slight contraction. The annual increase was propelled by trade-services (+3.1%) and construction (+2.7%), though industrial employment dropped by 2%.
Though, the quarterly figures painted a different picture.
- Overall Employment: Declined by 0.2% in the quarter.
- Industry: contracted by 1.1%.
- Construction: Saw a decrease of 0.8%.
- Trade-Services: managed a slight gain of 0.4%.
Labor costs: The Rising Price of Work
Hourly labor costs experienced a significant surge, reflecting broader economic pressures. Annually, hourly labor costs surged 41.5%, with trade-services leading at 43% and construction close behind at 46.8% for non-earnings costs like social security contributions.
The hourly earnings index rose 41.4% year-on-year, with quarterly increases of 8.5% for labor costs and 8.8% for earnings.
Analysis: A Market in Transition
The data paints a picture of a labor market grappling with inflationary pressures and shifting economic priorities. While wage growth and rising labor costs indicate strong demand in certain sectors, especially trade-services and construction, the decline in industrial employment and hours worked raises concerns about the manufacturing sector.
The trade-services sector’s resilience continues to bolster Türkiye’s labour market, but analysts will monitor whether industrial slowdowns signal broader economic shifts.
the data highlights robust wage growth and rising labour costs, fueled by inflationary pressures and strong demand in trade-services and construction. though, declining industrial employment and hours worked suggest challenges in manufacturing. The trade-services sector’s resilience continues to bolster Türkiye’s labour market, but analysts will monitor whether industrial slowdowns signal broader economic shifts.
(ILKHA)
