# Labor Cost Estimation for the Year 2017 in Turkey

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It is only weeks to end of the year, and naturally the next year’s annual budget is on the agenda of all companies. Of course the budgets comprised of many cost/ income elements, no doubt it is very important to make correct predictions on employment costs for getting close to the actual expenses.
In this article we will try to help you by providing the estimated payroll parameters, with which employment cost of employer is strictly connected.

### MINIMUM WAGE

Almost all of the payroll parameters are derived from minimum wage which is determined by "Minimum Wage Fixing Board" (Labor Law 4857, article 39) every two years. Traditionally, wage rise is applied differently for the first and second half of the year, however 2016 is an exception and net minimum wage has increased %30, covering all year long. Also 100,00 TL government incentive was applied.

For the time being it is not clear whether the 2017 minimum wage will be determined differently for the first and second half of the year, but we can make an average estimation covering all the year, and that will give us quite a good idea about what will be the employer's cost for minimum and maximum wage.

### COST OF MINIMUM WAGE TO EMPLOYER

Our average estimation of monthly gross minimum wage is 1.770,00 TL.

We also assume that the government wage incentive will continue as Prime Minister announced.

Below calculations are made on the assumption that %5 Treasury incentive granted by Law No. 5510 will be applied. In case some other incentives (such as Law No. 6611) are involved the cost of employer may vary.

### COST OF EMPLOYER                                                     2016      2017            RISE

MINIMUM GROSS WAGE                                                                         1.647,00       1.770,00          123,00

SSI EMPLOYER CONTRIBUTION (%15,5)                                                  255,28         274,35             19.07

UNEMPLOYMENT PREMIUM -EMPLOYER ( % 2 )                                      32,94          35,40               2,46

TOTAL COST OF EMPLOYER                                                                 1.935,23        2.079,75         144,52

COST OF EMPLOYER (WITH 100,00 TL TREASURY SUPPORT)*             1.835.23         1,979,75         144,52

*Employers were receiving daily 3,33 TL, (monthly 100.00 TL) premium refund throughout 2016 for each worker whose wage (earnings subject to premium) were notified under daily gross 85 TL (monthly gross 2.550.00 TL) in 2015, and for each personnel employed in new enterprises established/registered within 2016.

Employer will be paying 144,52 TL more for the employees earning minimum wage in case the governments wage incentive continue in 2017.

### COST OF MAXIMUM WAGE (SSI CAP) TO EMPLOYER

Of course there is not such an amount determined as maximum wage, but in Turkey's legislation there is a limit for earnings subject to premium. For the wages over this limit there will not be any additional SSI premium contribution both for employee and employer.

Monthly cap of earning subjected to premium are used to calculated as 6,5 times of monthly minimum wage, but the rate has been increased to 7,5 for 2017.

In line with our estimation, cap of earnings subject to premium will be 1.770.00 *7,5 = 13.275,00 TL in 2017.

2016 cap of earnings subject to premium was 10.705,50 TL. Total premium to be paid by employer was 1.873,46 TL for the wages 10.705,50 TL and over (even for the 13.275,00 TL and over).

But in 2017, employer will be paying 2.323,12 TL premium for the wages 13.275,00 TL and over.

So there will be a rise of 449,66 TL in employer contribution for the wages 13.275,00 TL and over.