The Polemic Of This Election: Where Are The Finances?

With six weeks left to the June 7 elections, survey results show the ruling Justice and Development Party (AKP) vote is not much higher than 40 percent. What scares the AKP is for the Peoples' Democratic Party (HDP) to cross the 10 percent threshold, thus shattering the calculations. Looking at surveys, the feared is about to come true. Of course, if everything runs its natural course…

The main target for the AKP is to prevent the snatching of the conservative Kurdish votes that may go to the HDP, to scare them by armed clashes and instability. Another target is to attract a portion of the Nationalist Movement Party (MHP) votes with the rising "separatist threat…"

Will all of this be adequate enough to open the door to the presidential system President Recep Tayyip Erdoğan needs or, let alone the majority for the presidential system, will it be enough for the AKP to form the government alone?

It does not seem to be likely so. The referendum threshold for the presidential system is 330 deputies and it is a very far possibility for the AKP to reach this figure. Apart from this, the possibility for the AKP to win the 276 deputies that are needed to form the government is falling rapidly; but there is always hope… Whatever ammunition they have, they are using it…

Sources of finance

The Republican People's Party (CHP), which released its election manifesto last week, has apparently become another source of concern for the AKP.  Especially those pledges in the CHP manifesto for the retired, minimum wage earners and those who need social protection have triggered an immediate defense from AKP officials. Defensive responses such as, "Where will you find the finances? There is no such financing" occupied the headlines.

The CHP, with its 200-page manifesto, created distinct publicity. The CHP manifesto contains chapters such as "Freedom, Rule of law and Democracy, Employment Generating Inclusive Economy, Solidarity and Social Justice, Quality Public Service for the Citizen, Nature and City Rights, Foreign Policy Based on Citizen and Values and Toward Information Society."

However, among them, the pledges of the CHP on "distribution" were the most attention grabbing ones. Looking at the reaction and the panic of the AKP, the main opposition party seems to have caught a good wave. It looks like "income distribution" is one of the most fateful issues of today and tomorrow.

It is possible to say that the polemic of "Where will you find the finances?" will continue until election day. The AKP has given up its own manifesto and is trying to attack the CHP manifesto, especially those sections concerning distribution using the polemic, "You cannot do it; you do not have the finances to do it."

This is how Finance Minister Mehmet Şimşek spoke on CNN Türk: "The extra cost of raising the minimum salary of the retired to 1,500 Turkish Liras is 37.5 billion liras; the cost of one bonus each for every religious holiday to the retirees is 26 billion liras.

The cost of training 800,000 unemployed is 11.2 billion liras. The extra cost of providing permanent positions for temporary workers and civil servants is 8 billion liras and also providing permanent positions for subcontracted workers is another 30 billion liras…"

Şimşek also added the cost of a support salary of 400 to 600 liras for the handicapped within family insurance was 6.8 billion liras, providing free lunch at schools would cost 5 billion liras, only the building costs of 15,000 family centers would be 3 billion liras, lifting the patient's share in health services would cost 2.5 billion liras and the cost of including the shopkeepers and craftsmen in the health services, even if they have not fully paid their premiums, is 2 billion liras.

In other words, he said this entire distribution and social program of the CHP requires almost 150 billion liras of financing. He then claimed that if such a program is applied, Turkey's economy would shrink and we would again be at the door of the IMF.

OECD average

The state's health expenditures, and other expenditures for retirees, the elderly, the disabled, poor students and socially excluded segments is called "social protection" and is recorded in statistics.

Turkey spent 245 billion liras for these expenditures in 2014, in other words 14 percent of its national income. Well, what is this figure in other countries? The average in OECD countries is around 22 percent. This is higher in some countries, for example, in France 32 percent of the national income, in Belgium 30 percent of the national income and in Italy, it is nearly 29 percent of the national income…

This means that the AKP, for 12 years, with its coal and food aid for the poor and its moves for access to health, with the "charitable" practices it conducts through the Ministry of Family and Social Policies, was only able to bring Turkey 8 points behind the average of OECD in social protection. It can be said that even this was good for society after 2003 and was influential for the AKP votes to climb from 30 percent to 40 percent. However, apparently, this was not adequate.

Society's needs for these kinds of social protection expenditures are continuing. Especially when you consider the level of salaries and wages, it can be understood that the working segment and low-income families have significant financial difficulty and their protection need is continuing.

Incomes

In the Development Ministry's data, the inadequacy of the level of salaries and wages can be seen. The number of wage earners is above 16 million and the majority of them consist of minimum wage earners as well as those who earn a little above the minimum wage. The minimum wage is net 949 liras and in the circumstances when the dollar rate is more than 2.70 liras, this figure corresponds to $350.

The minimum wage is considered as the base pay, determining the level of salaries and wages in both the private and public sectors. In the private sector, the average wage is estimated to be 25 percent more than the minimum wage, the highest. This means that an average private sector worker earns around net $440.

According to Finance Ministry data, the number of civil servants is 2.1 million and their minimum salary is 1,910 liras, with their average salary being 2,232 liras ($826). The average salary of retirees is 1,100 liras monthly, in other words around $410.

Additional expenditures?

The social protection program the CHP has rightfully included in its election manifesto was interpreted by Finance Minister Şimşek as an additional 150 billion liras of social expenditure. Faiz Öztrak from the CHP said this calculation was wrong and at the first instance, a financial source of 65 billion liras would be adequate. He claimed this could be created. This debate will go on until the day of the election.

Nevertheless, let us assume that the social expenditures in the CHP manifesto require 150 billion liras as Minister Şimşek said, then social protection expenditures will rise from the current 245 billion liras to 395 or 400 billion liras. This is 22 percent of the national income. In other words, it would mean the OECD average, which is the correct approach.

When OECD countries allocate 22 percent of their national income to social protection, which are health, retirees, old people and the needy, then why should Turkey not do the same and allocate the same percentage of its slice of national income to social protection?

While creating funds, the whole issue is to readjust the tax/income-public spending balance so that eight more points from the national income are allocated to social protection. This can be done. What is needed is to examine the tax injustice and to do justice in the distribution of the tax burden of different classes. In parallel with this, the public expenditures needle should also be moved toward social expenditures.

It can be done if it is wished. It is a part of being a social state, isn't it?

(GRAPH) - Istanbul