Turkish President Erdogan dropped the age retirement age requirement on Wednesday for over 2 million workers.
This is another political move by Erdogan, just like the Imamoglu conviction, which aims to boost his votes by making millions available to retire. This is not the first time we have seen such short-term, populist thinking, also known as election economics by the AKP.
This move is likely to place a heavy burden on the Turkish Social Security System. I predict many of the newly eligible workers will retire but they will continue to work. There are 13.9 million retirees in Turkey now, but the number will increase to 16.3 million if all of those eligible retire. This will place a 158 billion burden on the county by my calculation but the Labour Minister guessed it would be around 100 million.
In Turkey, to fund the Social Security System the firms contribute to the Social Security Fund per worker, however, for years these contributions were not able to fund the system completely and government funding was needed. This move will most likely increase this problem and more funding from the firms will probably be needed, decreasing the net salaries of workers and retirees in the long term.
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