Osman Şenkul
Throughout recorded human history, one of the most important social and economic institutions that have emerged is private property and goods/services markets, while another is undoubtedly money/capital markets and interest. In human social evolution, life becomes more predictable with the transition from hunter-gatherer societies, which required collective effort, cooperation and sharing and were subject to the whims of nature, to settled agricultural societies. Surplus production, which could feed segments of society beyond the economy, such as the clergy, soldiers and administrators, and the superstructural institutions of private property associated with it, emerged. As anthropology shows us, this transition was neither simultaneous nor linear, exhibiting great differences in different cultures around the world.
Without private property, there would be no borrowing; without borrowing, there would be no debt and no interest. Undoubtedly, the first economic power possessed by free individuals is their own labour power. The first thing that social individuals lend should be their own labour and labour power; we call this collective voluntary labour (imece). It is a method that seems to echo Maxim Gorky, who said, ‘Remember! People want comfort, not knowledge.’
As far as we know, in a situation of imece, the labour borrowed is repaid in the same way when the time comes or when needed, without increase or decrease and in a spirit of solidarity. The aim is to prevent the individual members of society from falling behind and becoming impoverished due to difficulties they cannot overcome on their own, depending on time, seasons and other reasons. Other transformations took place for labour to become property (slaves or serfs) or free wage labourers (migrations, wars, changing belief systems, etc.), and centuries passed.
However, developing industries need cheap labour, and cheap labour requires basic agricultural goods to be provided cheaply so that workers can work for ‘minimum subsistence wages that are just enough to keep them alive’. The way to make agricultural goods cheaper is to remove customs duties and all other restrictions on their import and liberalise them. Low wages reduce the prices of industrial goods and provide an advantage in international competition. For example, at the end of the Napoleonic Wars, in 1815, the greatest fear of landowners and tenant farmers in England was the influx of cheap grain products into England and the damage this would cause to their interests.
In this conflict of interests between property-owning classes, David Ricardo was the spokesman for the rising class: the industrial capitalist class, which did not want restrictions on growth and profits. Since, unlike the limited annual production cycles in agriculture, there are few constraints on the supply side of industrial production that markets cannot overcome, there should be no artificial barriers, such as foreign trade restrictions, to capitalist profit and capital accumulation, i.e., economic growth.
Therefore, supply and demand models suggest that the minimum wage, which was introduced centuries ago, could lead to job losses; however, minimum wages can increase the efficiency of the labour market and employment in monopolistic scenarios where individual employers have a degree of power to set wages across the entire market.
Supporters of the minimum wage argue that it raises workers’ living standards, reduces poverty and inequality, and boosts morale. Conversely, throughout history, opponents of the minimum wage have argued that it increases poverty and unemployment because some low-wage workers will be unable to find work and will join the ranks of the unemployed.
The origins of modern minimum wage laws lie in the Labour Ordinance (1349) issued by King Edward III of medieval England, which set the maximum wage for workers. Edward, a wealthy landowner, needed the help of serfs to work his land, just like the lords. In the autumn of 1348, the Black Death reached England and greatly reduced the population. Wages rose due to labour shortages, and King Edward III decided to set a wage ceiling. With subsequent amendments to the ordinance, such as the Statute of Labourers (1351), penalties were increased for paying wages above the set level.
The laws regulating wages initially set a ceiling on wages, but were later used to determine the living wage. A change made to the Statute of Labour in 1389 fixed wages according to food prices. Over time, the Justice of the Peace, responsible for setting the maximum wage, also began to set official minimum wages. This practice was formalised in 1604 with the passage of the Wage-Fixing Act by King James I for workers in the textile industry.
As the United Kingdom became increasingly capitalist, it adopted laissez-faire policies in the early 19th century that did not support the regulation of wages (upper or lower limits), and the Statute of Labour was repealed. In the later part of the 19th century, significant labour uprisings occurred in many industrialised countries. As trade unions were decriminalised throughout the century, attempts were made to control wages through collective bargaining.
Subsequently, minimum wages, which were introduced through legal regulations between countries’ practices, initially covered a relatively small number of worker categories and aimed to protect those considered particularly vulnerable. In this context, New Zealand became the first country to implement a minimum wage in 1894, followed by the Australian state of Victoria in 1896 and the United Kingdom in 1909. Minimum wages were generally seen as a temporary measure to be phased out after wage bargaining between the parties had been established. Early forms of minimum wages sometimes targeted the protection of home workers or women.
In the United States, the idea of a minimum wage was supported by both the American Labour Law Association and the National Consumers League, which was run by women and whose board of directors approved the idea of a legal minimum wage for women in 1909. Minimum wages were first introduced at the state level and, in most cases, applied only to women and children. These wages were regularly challenged in court, and in 1923, the US Supreme Court declared minimum wages unconstitutional. In 1938, at the initiative of President Roosevelt, the US Congress passed the Fair Labour Standards Act, which introduced a federal minimum wage. Its constitutionality was again challenged in court and was only upheld by the Supreme Court in 1941.
After the Second World War, the number of countries implementing a minimum wage increased. Newly independent countries such as India (1948) and Pakistan (1961) were among those that adopted a minimum wage. French-speaking African countries adopted the general minimum wage (SMIG) model with a lower rate for agriculture (SMAG), while English-speaking African countries adopted the tradition of sectoral wage boards.
As the idea that all workers should be protected against excessively low wages as a right became increasingly widespread, the legal scope of minimum wages was also gradually expanded. Nationally applied minimum wages emerged in the Netherlands (1969), France (1970) and Spain (1980). In the United States, coverage expanded from approximately 20 per cent of the workforce in the early years to 80 per cent by 1970. Coverage also expanded in countries where sectoral minimum wage rates were applied. For example, Indian states gradually increased the number of sectors and occupations “included” in the minimum wage coverage. The economic and intellectual context of the 1970s and 1980s halted this expansion in some countries. The United Kingdom abolished wage councils in the 1980s.
In recent years, minimum wage systems have been established or strengthened in many countries to address in-work poverty and inequality. The United Kingdom introduced a new statutory national minimum wage in 1999. Since the early 1990s, eight other members of the Organisation for Economic Co-operation and Development (OECD) – the Czech Republic, Slovakia, Poland, Estonia, Slovenia, Ireland, Israel and, most recently, Germany – have adopted statutory minimum wage systems. In most OECD countries without a statutory minimum wage, such as Denmark, Finland, Norway, and Switzerland, legal minimum levels are set through collective bargaining agreements. As a result, a minimum wage system exists in all European countries.
Many developing and emerging economies have also set or strengthened minimum wages. China adopted a minimum wage in 1994 and strengthened it in 2004. South Africa established a minimum wage system in 1997 after the end of apartheid. Brazil reinstated its minimum wage policy in 2005. The Russian Federation supplemented the national minimum wage with regional sub-limits in 2007. Malaysia adopted a national minimum wage in 2013, followed by Myanmar and the Lao People’s Democratic Republic in 2015, and Macao in 2016. The last country in Africa to implement a national minimum wage was Cape Verde in 2014.
In Turkey, although the minimum wage was incorporated into legislation with the Labour Law of 1936, it was not implemented until 1951. Between 1951 and 1967, the minimum wage was determined by local commissions. The practice of the minimum wage determination commission, which has continued with several changes to the present day, began after 1967.
Although all policy makers in Turkey emphasised the importance of the minimum wage system, the inadequacy of the existing system, and the fact that the minimum wages set did not even meet the basic economic needs of those receiving them, an inflation-indexed determination policy was pursued, and economic prosperity gains were transferred to other segments of society, particularly due to misguided economic and distribution policies. More importantly, however, the rate of minimum wage application in Turkey, which is applied temporarily and very limitedly almost everywhere else in the world, is spread across almost the entire base. According to calculations made from official records, minimum wage workers in 2024 will account for 37.5 per cent of all registered workers, amounting to 11.2 million people. When combined with those earning below the minimum wage or 5% above it, this figure rises to 54% of workers, or 16.14 million people. Across the European Union, workers earning the minimum wage or up to 5% above it number 12.8 million. In other words, while those earning only the minimum wage in Turkey are only 1.6 million fewer than the total number of workers earning the minimum wage or 5% more across the EU, calculations that include those earning 5% more, as in the EU, show that there are 3.34 million more minimum wage workers in Turkey than all minimum wage workers across the EU.
Of course, the fact that minimum wage workers make up more than half of all workers is also a significant problem; however, what is more important is that the minimum wage remains so low that it does not even provide enough support to meet basic living conditions.
As can be seen, according to records, the minimum wage entered human history approximately 600 years ago, but it was only 130 years ago that it was legally regulated in the Southern Hemisphere. The minimum wage, which was introduced approximately 600 years ago in human history according to records but only became legally regulated 130 years ago in the Southern Hemisphere, in New Zealand, refers to the amount paid to workers for a standard working day and is set at a level that covers the worker’s ‘basic needs such as food, shelter, clothing, health, transport and culture’ based on current prices. However, the poverty line of 30,143 lira announced by Türk-İş at the end of last year is 2,068.75 lira higher than the minimum wage of 28,075 lira set for the new year. In other words, the ‘increased’ minimum wage to be applied in Turkey in the new year is at a level that cannot even cover ‘food,’ the first and most important item of the worker’s ‘basic needs, such as food, shelter, clothing, health, transportation and culture.’
From this perspective, the minimum wage in Turkey, which began to be implemented 15 years after its legal regulation, cannot even meet the basic requirements 600 years after the first applications in the world and 130 years after the first legally regulated applications. In other words, it is evident that not a single step has been taken in Turkey regarding how the minimum wage, which was introduced by legal regulation 90 years ago, should be determined and implemented.
In short, the minimum wage in Turkey has not come of age, even at 90 years old.