The main economic indicators of the two countries.
Inflation at the end of 2021 in Turkey was a 19-year high, and the national currency depreciated by more than 40%. Inflation in Ukraine also jumped slightly last year, and prices rose significantly, reports the Chronicle.info with reference to Channel 24.
However, if the National Bank continued to raise the discount rate throughout the past year, despite inflationary pressure, in Turkey, on the contrary, they adhered to a policy of low rates. Therefore, we decided to compare the main economic indicators of these two countries in order to find out where the population has a higher standard of living.
Standard of living in Turkey and Ukraine Monthly salary
Minimum salary in Turkey in 2021 was at TL 2,826 after tax. But, if at the beginning of the year it was $380, then due to inflation at the end of the year, the Turks were already earning significantly less — $186, writes Daily Sabah.
Therefore, in 2022, the minimum wage was sharply raised to 5,004 Turkish liras before tax or 4,250 Turkish liras net (almost 9,000 hryvnias), the press service of the President of Turkey reported. Consequently, Ukrainians, who raised the minimum wage in December last year to 6,500 hryvnia (before tax), receive less.
However, a higher minimum wage does not necessarily mean a higher standard of living in Turkey. The fact is that the proportion of workers in the private sector who work for the minimum wage was 69% in 2021, according to a study by DISK. Economists in the country are worried that the average salary is getting closer to the minimum. And with a sharp increase in wages in 2022, this share will grow again.
According to Turkish statistics and recruitment agencies, the average salary in Turkey in 2021 is 8,000 liras per month (slightly more than 17,000 hryvnias) . However, these figures are relevant for large metropolitan areas such as Istanbul and Ankara.
Pay attention! Despite the fact that the salary of the Turks is growing all the time, in dollar terms it continues to fall. If in 2013 the minimum wage before taxes was $547, today it is $370.
At the same time in Ukraine the difference between the average and the minimum wage is palpable. In November 2021, the average salary before tax was UAH 14,282, according to the State Statistics Service. The minimum was at the level of 6 thousand hryvnias in November last year.
Retirement
Previously, in Turkey, the population could retire as early as 45 years old, but due to a sharp increase in the percentage of the non-working population, changes were made. Therefore, now the retirement age for women is 58 years, and for men — 60 years.
In Ukraine, women and men retire at the age of 60. However, Turkey and Ukraine plan to increase the retirement age. It is planned that by 2048, men in Turkey will retire at 65, and after 2048, women will also retire at 65.
The amount of pension payments
In Turkey, the pension is tied to the minimum wage, while in Ukraine it is tied to the subsistence level, the amount of which is prescribed in the budget.
The minimum pension in 2022 in Turkey raised by 66% to 2,500 liras (almost 5,278 hryvnias). This will affect 1.26 million pensioners, according to local media. The maximum pension in the country is 10 thousand lira, but former civil servants are more likely to receive such payments.
In In Ukraine the minimum pension from December 2021 is 1,934 hryvnia, but by the end of the year it will rise to 2,093 hryvnia. This is because the budget-2022 provides two more stages of raising the subsistence level this year. However, only men of retirement age with 35 years of insurance experience and women with 30 years of insurance experience can count on the minimum wage in Ukraine.
The maximum pension from December 2021 is UAH 19,340, since it cannot exceed 10 living wages.
Economics of Turkey and Ukraine Inflation and rising prices
In Turkey, according to the Turkish Statistical Institute, the inflation rate jumped to 36.08% in December. In Ukraine, the figure was only 10% per annum, but this is quite far from the NBU's goal of 5±1%.
The traditional response to rising inflation is to raise the discount rate, but Turkish President Recep Tayyip Erdogan decided to take the opposite course. He put pressure on the Turkish central bank, calling for a rate cut and an increase in the amount of the national currency in circulation. In this way, Erdogan further undermined inflation.
Also previously stated that the policy of low rates is part of a successful «war for economic independence», noting that he had previously reduced inflation in Turkey to about 4% and will achieve it again.
Regarding Ukraine, then in 2021 the price increase was 10%, which is the highest since 2017 (13.7%), according to the State Statistics Service. Prices rose by 10.8% last year. Economic analyst Lubomyr Shavalyuk believes that this happened due to two factors — seasonality and the acceleration of inflation in the world.
What's wrong with the Turkish economy
Erdogan's loose monetary policy has significantly devalued the national currency. As a result, Turkish stocks in the fall of 2021 were historically the cheapest for foreign investors, but at the same time the most expensive for citizens of the country.
At the same time, it reduced confidence in the Turkish national currency, as a result of which two-thirds of deposits in Turkish banks are open in foreign currency. Also due to rapid inflation and «printing of the lyre» the purchasing power of the general population has declined. Therefore, Turkey has become even cheaper for foreign investors and businesses, and at the same time more expensive for citizens.
Pay attention! At the end of 2021, Erdogan reported a record export of $225.4 billion. This is 24.6% more than in the pre-crisis year of 2019.
GDP level
Since 2002, Turkish GDP constantly increased after the crisis in 2001 year, when it fell by a record 5.75%. It is worth recalling that in 2002 the Justice and Development Party, founded by the current President Erdogan, came to power.
With the victory in the elections, a floating exchange rate was introduced, restrictions on the participation of foreign capital were lifted and the independence of the central bank was ensured. Thus, Turkey became attractive to foreign investors and attracted $123.8 billion in direct investment in 2002-2012. This is ten times more than in the previous decade.
Pay attention! In 12 years, Turkey's GDP has grown almost five times.
Regarding  ;Ukraine, it is worth recalling that Ukraine ended 2021 with the highest dollar GDP in the entire history of independence. Minister of Economy Yulia Sviridenko spoke about almost $195 billion. She also added that this year the government plans additional GDP growth thanks to new programs.
The difference between the GDP of Ukraine and Turkey, according to the World Bank in 2020:
- Turkey – 719.9 billion dollars (increased by 1.8% per annum),
- Ukraine – 155 billion dollars (decreased by 4% per annum).
Reference: A drop in GDP is an indicator of a country's economic downturn, or recession, while growth, on the contrary, indicates its prosperity.
GDP per capita
To equalize the standard of living of the population in Turkey and in Ukraine Economy 24 suggests paying attention to such an indicative factor as GDP per capita. Therefore, according to the World Bank, in Turkey it was $8,536 in 2020, while in Ukraine it was $3,726.
Interesting! In 2023, Erdogan promised to increase exports to $500 billion, GDP to $2 trillion, and GDP per capita to $25,000.
What is GDP per capita population
This is a measure of output per capita in dollars of constant purchasing power, while offsetting the impact of inflationary processes. A higher real GDP per capita is an indicator of a higher standard of living.