Turkey’s Erdogan administration is stepping up efforts to deliver pre-election sweeteners for the electorate ahead of the country’s parliamentary and presidential polls scheduled for June.

On December 28, Turkish President Recep Tayyip Erdogan, in power for nearly three decades, eliminated a retirement age requirement. The move will enable more than 2mn workers, regardless of age, to retire immediately. Turkey’s government wants to set aside at least Turkish lira (TRY) 250bn ($13.4bn) in the first year of the early retirement scheme to fund the delivery of the pledge, Bloomberg has reported. There are anxieties that the early retirement offer amounts to the most permanent burden placed on the state budget in recent years, with a negative impact on the country’s risk premium and inflation among the consequences.

Previously, Turkey’s retirement age for women was 58 years, while for men it was 60 years.

In another pre-election boost for Turks suffering from their country’s longstanding economic crisis—a crisis marked by rampant inflation and the destruction of the value of the Turkish lira (TRY), widely blamed on claimed economic mismanagement attributed to Erdogan—it was announced on December 22 that Turkey's monthly minimum wage will be Turkish lira TRY 8,507 ($454) in 2023, up 55% from the level determined in July 2022 and 100% higher than the level set in January 2022.

Erdogan said the minimum wage may be increased again across the upcoming year.

Representatives of the employee unions that took part in the minimum wage talks did not attend the announcement of the hike at the presidential palace, Reuters reported. Erdogan said the employer and employee unions could not settle on a minimum wage agreement, prompting the government to step in to determine the scale of the hike.

Businesses in Turkey are now braced for employee cost increases amid global economic difficulties.

As he ratchets up his election campaign, Erdogan will also try to maximise use of the low interest rates he’s brought in despite rampant inflation. The benchmark rate stands at 9% versus inflation of 84%.

Though Turkey’s central bank on December 22 stuck to its word by leaving the key rate unchanged for the first time in five months, at 9% following 500 bp of rate cuts since August, Erdogan already has the single-digit figure he was looking for a credit splurge to fire up growth.

“We want investors to make investments,” Erdogan told his AKP ruling party deputies in a speech on last week. “Here you go 9%; now invest.” 

Economist Selva Bahar Baziki was quoted by Bloomberg Economics as saying: “The central bank’s current accommodative stance will weaken the lira and further pressure price gains. It will try to contain this negative feedback by relying on non-interest rate tools that have so far guided the financial sector toward lira-based assets and liabilities, favoring lending to exporters. We also expect the central bank to continue with its currency market interventions.”

Erdogan, meanwhile, has announced an $11bn package of government-backed cheap loans for small and medium sized enterprises (SMEs). 

Affordable housing projects and subsidised utility bills are also part of the pre-election mix.