While the countdown for setting the new minimum wage continues, ready-made clothing, textiles, leather and carpet exporters requested a premium discount. Exporters requested that the premium discount currently applied as 5 percent should be increased to 10 percent for 2 years in the ready-made clothing, textiles, leather and carpet sectors, where a loss of approximately 300 thousand jobs recorded in the past two years.
Turkey exports over 30 billion dollars in ready-made clothing, textiles, leather and carpet industries annually. 56 percent of this amount are achieved by the Istanbul Apparel Exporters' Association (İHKİB), Istanbul Textile and Raw Materials Exporters' Association (İTHİB), Istanbul Leather and Leather Products Exporters' Association (İDMİB) and Istanbul Carpet Exporters' Association (İHİB), which are operating under the roof of the Istanbul Textile and Apparel Exporters' Associations (İTKİB).
İHKİB President Mustafa Gültepe, İTHİB President Ahmet Öksüz, İDMİB President Güven Karaca and İHİB President Ahmet Hayri Diler have come together to assess the current conditions just in days to set the new minimum wage. In a joint statement made by the four presidents after the meeting, it was emphasized that support which should be made available for all manufacturers and exporters to counter increasing costs. The statement, which drew attention to the importance of the ready-made clothing, textiles, leather and carpet sectors for the Turkish economy in terms of production, employment and exports, published the following comments:
Labor Fees Are 6-7 Times More Higher Than Competitors
“The four sectors realized a total export of 36.4 billion dollars in 2022 and provided employment for 1.3 million people. Unfortunately, we have been facing a serious decline both in exports and employment of our sectors for the last two years. While our exports decreased from 36.4 billion dollars to 30 billion dollars, our employment figure which recorded as 1.3 million decreased to approximately 1 million. So, we have lost our competitiveness in all four sectors in which we set ambitious goals in world markets. Because in a period when global demand was shrinking, our costs increased well-above the world average. In terms of production costs, we are 40-50 percent more higher than our competitors in Asia and 15-20 percent more than many other countries in Europe in dollar classification. The cost of the minimum wage to the employer in our country is 6-7 times higher than our competitors in Asia. What is even worse is that we are falling behind in labor costs compared to some countries in Europe.
The Public Should Provide Grants
Labor constitutes one of the most important cost items in sectors such as ready-made clothing, textiles, leather and carpets. We always believe that our employees deserve more. However, under current conditions, the burden associates with labor force should be handled with a joint effort in labor-intensive sectors. The minimum wage burden should not only be left to the employer. Income tax brackets deducted from paid employees should be updated in line with the current conditions. We do not want to give away our markets which we controlled via great effort in many years. To achieve this, labor-intensive sectors should be supported. At this point, we demand that the SGK employer premium discount, which is currently applied as 5 percent, should be increased to 10 percent for 2 years for ready-made clothing, textiles, leather and carpet sectors, regardless of company size. We demand any regulation to be made on this issue to cover not only SMEs but all companies operating in our sectors.”
Production Moves Abroad
In the joint statement of the four presidents, it was underlined that some companies have shifted their production abroad due to high costs in Turkey, and many of them are also considering moving their whole operations to foreign locations. The statement underlined that the loss of long-standing accumulated know-how and trained workforce along with companies moving abroad will lead to devastating consequences.
