Call for Premium Reduction from Ready-made Clothing, Textile, Leather, and Carpet Exporters

As the countdown for the new minimum wage determination continues, ready-to-wear, textile, leather, and carpet exporters have called for an increase in the contribution discount. Exporters have requested that the currently applied 5% contribution discount be raised to 10% for a duration of two years in the ready-to-wear, textile, leather, and carpet sectors, which have faced approximately 300,000 job losses over the past two years.

Turkey has an annual export of over $30 billion in ready-to-wear, textiles, leather, and carpets. Of this export, 56% is carried out by associations under the Istanbul Textile and Apparel Exporters' Associations (İTKİB), including the Istanbul Ready-to-Wear and 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).

İHKİB President Mustafa Gültepe, İTHİB President Ahmet Öksüz, İDMİB President Güven Karaca, and İHİB President Ahmet Hayri Diler came together for an evaluation of the situation just days before the determination of the new minimum wage. In a joint statement made by the four presidents after the meeting, it was emphasized that all producers and exporters should be supported against rising costs. The statement highlighted the importance of the ready-to-wear, textile, leather, and carpet sectors for the Turkish economy in terms of production, employment, and export.

COST OF MINIMUM WAGE FOR EMPLOYERS IS 6-7 TIMES MORE EXPENSIVE COMPARED TO ASIAN RIVALS "The four sectors achieved total exports of $36.4 billion in 2022 and provided employment for 1.3 million people. Unfortunately, our sectors have faced a significant decline in both exports and employment over the past two years. Our exports have dropped from $36.4 billion to approximately $30 billion, and our employment has decreased from 1.3 million to nearly 1 million. We have lost competitiveness in these four sectors where we were assertive in global markets. Our costs have increased significantly above the world average during a time when global demand has contracted. We are 40-50% more expensive in dollar terms compared to our competitors in Asia and 15-20% more expensive than many European countries in production costs. The cost of minimum wage for employers in our country is 6-7 times higher than that of our Asian rivals. Even more concerning, we are at a disadvantage in labor costs compared to some European countries as well."

SUPPORT SHOULD BE INCLUSIVE OF ALL COMPANIES REGARDLESS OF SIZE In sectors like ready-to-wear, textiles, leather, and carpets, labor costs constitute one of the most significant expense items. We always believe that our employees deserve more. However, under the current conditions, particularly in labor-intensive sectors, the burden arising from labor costs needs to be shared. The increase in minimum wage should not be solely placed on employers. Income tax brackets deducted from wage earners should be updated in accordance with current conditions. We do not want to lose the markets we have built over many years through great efforts. To this end, supporting labor-intensive sectors is crucial. In this context, we demand that the currently applied 5% employer's SGK contribution discount be increased to 10% for ready-to-wear, textile, leather, and carpet sectors for two years, regardless of company size. We request that any regulation made on this matter covers all companies operating in our sectors, not just SMEs."

PRODUCTION IS MOVING ABROAD, WE ARE LOSING SKILLED LABOR In the joint statement by the four presidents, it was noted that due to high costs in Turkey, some firms have relocated their production abroad, and many others are considering moving abroad. The statement emphasized that the loss of skilled labor and the long-standing knowledge base along with the companies moving abroad could lead to irreparable consequences.