Turkiye President Abolishes Mandatory Retirement Age... "2.25 Million People Can Retire Immediately"

Ahead of June Next Year Presidential Election, Targeting Voter Sentiment
Economic Burden Following Minimum Wage... Severe Inflation

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Recep Tayyip Erdogan, President of Turkiye (Turkey), has announced the abolition of retirement age restrictions to allow more than 2 million workers to retire early, sparking controversy. As the number of pension recipients surges, concerns are growing that Turkiye's economic crisis, already suffering from severe inflation exceeding 80%, will worsen.

According to the Associated Press on the 28th (local time), President Erdogan stated at a press conference that "the existing retirement age restrictions will be abolished," emphasizing that "2.25 million people will be able to retire immediately" as a result. Consequently, a large influx of early retirees is expected to significantly increase the number of pension recipients.

In Turkiye, the existing retirement age was set at 60 for men and 58 for women. Only upon reaching this age could one receive a pension, but with the removal of the retirement age, pension receipt will be accelerated. Although the exact cost of this measure has not yet been clearly calculated, there are concerns that pension shortages may worsen if more than 2 million retirees emerge. Currently, the total number of pension recipients in Turkiye reaches 13.9 million.

Despite the increasing economic burden, the dominant analysis is that President Erdogan's move to abolish the retirement age restriction is a strategy to win votes ahead of the presidential election scheduled for June next year. Turkiye's labor organizations have opposed the retirement age restrictions for several years and have instead demanded improvements to the system so that workers can retire and receive pensions once they complete the mandatory working days.

Following a recent significant increase in the minimum wage, President Erdogan is making every effort to boost his approval ratings by also removing the retirement age restriction. On the 22nd, he announced that Turkiye's minimum monthly wage for next year would be set at $455, more than doubling compared to the beginning of the year.

However, voices of warning continue both inside and outside Turkiye that these populist pledges could further drive up inflation rates and worsen the economy. Last month, Turkiye's inflation rate reached 84.4%, and the real interest rate adjusted for inflation is estimated at -75%.