Wage Increases, Inflation, and the Endless Cycle of Dissatisfaction
New Year periods are almost everywhere a threshold where economic expectations are recalibrated. In Turkey, however, this threshold has long been interpreted through the lens of wage increases. Minimum wage hikes, civil servant salary adjustments, collective bargaining agreements, and white-collar pay raises bring together very different expectations among groups exposed to the same inflation. The resulting picture is usually familiar: if wage increases are low, dissatisfaction grows; if they are high, rising costs fuel inflation once again.
At this point, I find myself thinking that the problem is not only “how much the raise is”, but rather the relationship between wage increases and the broader economy. When the link between income growth and price growth breaks down, everyone feels like they are constantly on the losing side. And in recent years, this has not been a problem unique to Turkey.
The U.S. and Europe: Confronting Unfamiliar Inflation
In the post-2021 period, the U.S. and Europe faced inflation rates they had not experienced in decades. While U.S. consumer inflation approached 9% in 2022, several Eurozone countries saw double-digit figures. For Western economies, this created a psychological rupture, as inflation had long been considered an “exceptional” phenomenon.
In this new environment, wage increases accelerated and unions returned to the negotiating table with more aggressive demands. Yet the outcome was strikingly similar: higher wages raised costs, costs fed into prices, and a wage–inflation spiral emerged. In other words, a cycle Turkey has lived with for years became a global phenomenon, albeit at different scales.
It is precisely here that Japan presents a striking contrast.
Japan: Working in an Inflation-Free Economy
Japan has experienced low inflation—and at times even deflation—for nearly 30 years. According to OECD and Bank of Japan data, average annual inflation between 1995 and 2020 remained in the 0–1% range. Real wages, meanwhile, have largely stagnated.
At first glance, this may sound like “stability.” But this stability comes at a cost: weak consumer demand, limited domestic consumption, and constrained growth. Yet what is particularly interesting is this: Japanese employees do not live in a constant state of wage-increase expectations.
Where Does Motivation Come From Without Raises?
This is the question that made me pause the most. When there is no inflation, there is no constant expectation of raises. In Japan, employee motivation is shaped less by salary growth and more by job security, organizational loyalty, and social stability.
Long-term employment, predictable living costs, and low price volatility make it easier for individuals to plan their future. Instead of asking, “How will I get through this month?”, people can focus on “Where will I be in ten years?” This may slow economic growth, but it also significantly reduces social stress.
Of course, the Japanese model is far from perfect. Low consumption, an aging population, and limited appetite for innovation pose serious risks. Still, the idea of an inflation-free working life offers a valuable perspective for countries overwhelmed by endless wage debates.
Lessons for Turkey
Turkey neither can nor should pursue a long-term stagnation model like Japan’s. However, Japan has one undeniable strength: price stability. In my view, without bringing inflation down, it is impossible for wage discussions in Turkey to rest on healthy ground.
The solution is not one-off, high wage hikes, but predictability. In an environment where inflation is permanently reduced, income growth is supported by productivity, and price expectations are anchored, wage increases stop being a crisis headline. In this sense, the Japanese model reminds us of something fundamental: what truly motivates people is not earning more every year, but preserving the value of what they earn.
When economic stability is achieved in Turkey, wage increases will no longer be a source of dissatisfaction, but a normal management tool. Otherwise, even if the numbers change, the debate never will.
