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Article | Beyond Data

Economic trends driving talent and rewards decisions in Turkey

By Berker Sakir | August 15, 2022

A sharp spike in inflation is stirring Turkish organizations to adjust the way they approach pay.
Compensation Strategy & Design|Total Rewards
Beyond Data

Inflation in Turkey has been on a dramatic upward trajectory since the last quarter of 2021, and it hit a 23-year record high in July 2022 when it reached 80%. This sharp spike is stirring organizations in the country to adjust salaries to support employees’ cost of living, market competitiveness and retention policies.

In September 2021, WTW began conducting monthly salary pulse surveys to provide clients with just-in-time insights that will support informed decision making around pay strategies in tumultuous times. Our June 2022 pulse survey, which reflects responses from 608 organizations (47% local, 53% foreign), revealed three trends affecting talent and rewards in the Turkish business landscape.

  1. 01

    Vast majority of organizations conducted annual salary reviews in January

    Most survey participants (65%) provided their annual salary increase as planned in January, while 14% applied salary increases in April and another 10% in March. Additionally, almost half (48%) of organizations said they planned to provide mid-year salary increases in July.

    It bears noting that 94% of organizations reported that they would use the local currency (Turkish lira) in their compensation payments compared to the 1% that planned to use hard currency. The remaining 5% said they would use a hybrid approach to paying out salaries.

  2. 02

    Planned salary increase budgets reach a median of 40%

    21% of organizations said they are increasing the frequency of their annual salary review; about two-thirds of participants in this group plan to review salaries twice per year, while about one-quarter will review every three months. Additionally, 23% of organizations will conduct their review earlier than usual. Meanwhile, 9% plan to update the frequency of salary increases based on economic conditions.

  3. 03

    Mid-year salary increases are becoming prevalent

    A growing percentage of organizations are planning to apply mid-year salary increases. This may be linked to retention strategies amid growing turnover rates, which were at 13% for voluntary and 8% for involuntary based on our previous April 2022 pulse survey. An overwhelming majority of organizations (94%) prefer applying the increase on the base salary instead of paying it as a lump sum.

    In 2021, 56% of organizations operating in Turkey began considering mid-year salary increases, with 42% putting them into practice. For 2022, 86% of organizations have adopted this action, with 38% already having applied a mid-year salary bump.

    Figure 3. Percentage of organizations applying mid-year increases in 2021 versus 2022 alt Percentage of organizations applying mid-year increases in 2021 (42%) versus 2022 (86%)

Taking a modernized approach to rewards

2022 is especially challenging for Turkish organizations. At the same time, though, the country’s specific market dynamics opens opportunities for critical changes to pay and rewards. This year is the beginning of a different era in pay strategies. To address concerns over talent and pay, organizations are recognizing the need to allocate more budget dollars to key roles and apply multiple salary increases throughout the year.

Determining effective actions for protecting talent and salary budgets at the same time requires a close watch of market trends and reliable salary data. Please contact us if you are interested in participating in our monthly pulse surveys or want access to timely insights for your pay and talent strategies.

Author

Berker Sakir
Rewards Data Intelligence Leader, Turkey

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