2025 Cost of Minimum Wage to Employers

The minimum wage is reviewed regularly every year and is updated taking into account factors such as inflation, economic growth and the cost of living.
Date: 31 January 2025
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What is Minimum Wage?

Minimum wage is the lowest salary amount that an employer is required to pay an employee to meet their basic living needs. This wage is determined to ensure that workers can live decently, are economically protected, and to maintain a fair balance in the labor market. Minimum wage varies from country to country and may change depending on economic conditions.

Determination of Minimum Wage

Minimum wage is typically set by the government through legal regulations and is fixed for a certain period. In the determination process, the government, labor unions, employer representatives, and relevant institutions come together to consider various economic factors, including:

  • Inflation rate

  • Economic growth and employment status

  • Cost of living

  • Social security contributions

  • International standards and best practices

The Minimum Wage Determination Commission has set the net minimum wage for 2025 at 22,104 TL per month.

Importance of Minimum Wage

Setting the minimum wage is crucial for both employees and employers.

For employees, minimum wage helps meet their basic needs, maintains their standard of living, and ensures job security. For employers, it boosts employee motivation, ensures workplace harmony, and contributes to social welfare. Economically, minimum wage directly affects consumption levels, increases market demand, and helps stimulate economic growth.

Effects of Minimum Wage

  • Impact on Employment: A high minimum wage can increase business costs, leading some employers to reduce the number of employees to balance expenses. However, it can also boost consumption by increasing the purchasing power of low-income workers.

  • Impact on Inflation: Raising the minimum wage increases purchasing power and business costs, leading to higher prices for goods and services, which in turn raises inflation rates.

  • Impact on Income Distribution: Increasing the minimum wage can improve the welfare of low-income groups and reduce income inequality.

  • Impact on Businesses: Higher minimum wages raise employment costs, posing additional financial burdens, especially for small businesses.

Difference Between Gross and Net Wage

Gross salary refers to an employee’s total earnings before any deductions. Net salary is the amount received after deductions such as Social Security (SGK) premiums, unemployment insurance, and income tax.

Gross Salary Calculation

The first component of personnel costs is the gross salary. Thus, it is important to start with the gross wage calculation.

The steps for calculating gross salary are as follows:

Gross Salary = Net Salary + (SGK Employee Premium + Unemployment Premium) + Income Tax + Stamp Tax

However, an employee’s cost to the employer is not limited to the gross salary alone. The total cost is calculated as follows:

Total Cost to Employer = Gross Salary + Employer’s SGK Contribution

Total Employer Cost of Minimum Wage in 2025

For 2025, the total cost that employers will bear is calculated as follows. First, after determining the net minimum wage, employer cost details can be calculated.

2025 Minimum Wage Calculation

The following table includes the calculations based on the 2025 minimum wage:

  • Gross Salary: 26,005.50 TL

  • Social Security Premium (Employee Share): 3,640.77 TL

  • Unemployment Insurance Premium (Employee Share): 260.06 TL

  • Total Deductions: 3,900.83 TL

  • Net Minimum Wage: 22,104.67 TL

Total Employer Cost of Minimum Wage

The total cost to employers is calculated as follows:

  • Gross Salary: 26,005.50 TL

  • SGK Premium (Employer Share - 15.75%): 4,095.87 TL

  • Unemployment Insurance Premium (Employer Share - 2%): 520.11 TL

  • Total Employer Cost: 30,621.48 TL

SGK Obligations and Contribution Rates

Employers must pay SGK premiums and other contributions based on their employees’ earnings by the end of the following month.

SGK Discounts

Employers who meet certain conditions can benefit from a 5-point SGK premium discount on the employer’s share. To qualify for the SGK discount, the following conditions must be met:

  • Submitting employees’ monthly premium and service documents to SGK within the legal period

  • Timely payment of employee premiums and the employer's share

  • No outstanding debts to SGK

2025 SGK Premium Rates

For 2025, the valid SGK premium rates are as follows:

  • Minimum Wage Lower Limit: 866.85 TL (Daily)

  • Minimum Wage Upper Limit: 6,501.38 TL (Daily)

Insurance Premium Calculation

Insurance premiums vary based on employees' earnings. For example:

  • Monthly Insurance Premium for Lower Limit: 866.85 TL x 30 days x 35% = 9,101.93 TL

  • Monthly Insurance Premium for Upper Limit: 6,501.38 TL x 30 days x 35% = 68,264.49 TL

Payment Time and Conditions for Insurance Premiums

Employers must pay insurance premiums by the end of each month. If the payment date falls on a weekend or public holiday, the payment must be made on the next business day. This ensures accurate cost calculations and compliance with legal obligations.

SGK and Unemployment Insurance Premium Rates

The employer-paid SGK premium includes contributions for employee insurance and other benefits. These rates vary depending on the type of employment and business sector.

Key employer costs include:

  • SGK Employer Premium (20.75%): The social security premium employers must pay on behalf of employees.

  • Unemployment Insurance Employer Share (2%): The employer's contribution to unemployment insurance.

  • Stamp Tax and Income Tax: Other taxes affecting employer obligations.

Employer Cost Management and Strategies

Each employer's cost management strategy depends on industry, market position, workforce size, and company size. Effective cost management is necessary for successful business operations. Cost management involves planning, monitoring, and controlling production expenses to optimize resources and maximize profitability. It also helps businesses maintain a competitive advantage and sustain growth. Financial management tools like cost accounting, budgeting, and performance measurement play a crucial role in this process.

Methods to Reduce Personnel Costs

  • Remote and Hybrid Work Models: Adopting remote or hybrid work can reduce office expenses (rent, utilities, office staff costs) and cut transportation costs in half.

  • Training and Certification Programs: Offering employee training enhances motivation, improves job quality, and contributes to the company’s vision.

  • Automation and Software Solutions: Implementing technological solutions can reduce workforce needs and lower employer costs.

  • Performance Management: Identifying low-performing employees and developing strategies to improve their efficiency.

  • Improving Work Processes: Streamlining work processes by reducing staff numbers and defining job roles effectively can enhance efficiency.

Employer and Employee Rights

Employer and employee rights and responsibilities are defined by legal regulations and mutual agreements in employment contracts.

Employee Obligations to Employers

  • Personal Work Obligation: Employees must personally perform their duties as agreed.

  • Diligence and Loyalty Obligation: Employees must work carefully and act in the best interest of their employer.

  • Overtime Work Obligation: Employees may be required to work overtime under certain conditions.

  • Compliance Obligation: Employees must adhere to employer regulations and instructions.

Employer Obligations to Employees

  • Wage Payment Obligation: Employers must pay wages as specified in employment contracts.

  • Leave and Holiday Rights: Employers must grant employees leave and holiday rights.

  • Transportation Provisions: If transport is provided, employers must cover maintenance and related costs.