Turkey goes to the polls on May 14, 2023. This article examines the role of pension reforms as key elements in this - and in previous - electoral campaigns.
Politics in Turkey are often portrayed in terms of identity politics. Islamists vs seculars. Turks vs Kurds. While undoubtedly important, such identities are not the only thing that matters for voters. As in many other countries, a crucial factor for electoral support is material well-being. Hence, it should come as no surprise that social policy plays a key role in the run-up to the parliamentary and presidential elections scheduled to take place on May 14, 2023.
The cornerstone of Turkey’s welfare state is pensions. More than three-fifths of all public social expenditures are devoted to old age and survivors’ pensions (OECD 2023). Therefore, it is only natural that the Justice and Development Party-led (AKP) government of President Erdoğan, in power since 2002, would focus its attention on this policy area.
In the last general elections, in 2018, it had done so with much success. Right before the elections, the AKP government had launched a pension reform that increased benefits. The government doubled the value of social pensions, which benefitted around a million low-income elderly citizens. Most importantly, it created a special flat-rate payment that coincided with two Islamic festivities – the equivalent of Christmas allowances common in some European welfare states. Such special payouts had been initially demanded by the opposition, but the government pragmatically adopted a watered-down version of their proposal. The elections took place one week after one such festivity - And millions of pensioners received the payment in time for the vote. Quantifying the electoral impact of social policy reform is never straightforward, but the government’s reform seems to have played out to their advantage, as Erdoğan and the AKP were re-elected.
The following year, for the 2019 local elections, the government again deployed social policy reforms as part of its election campaign toolkit. This time, however, it focused on poverty relief and urgent social assistance. An economic crisis with double-digit inflation exposed the weaknesses of Turkey’s social assistance system – one of the government’s proud achievements and electoral trump cards (Özel and Yıldırım 2019). The system provides benefits through various schemes for qualifying groups, such as widows or children (Öktem 2018). With unemployment, inflation, and poverty rates all rising, those social assistance programs were stretched to their limits. In response, the government devised a novel scheme right before the elections. AKP-led municipalities directly marketed low-priced vegetables and fruits to protect low-income groups from inflation. The idea was to create opportunity for self-targeted beneficiaries: whoever was willing to spend hours in a queue for cheap onions in winter, was clearly ‘poor enough’ to deserve benefits. While one study shows the scheme to have garnered more support for the government at the local level (Kaba 2020), the gain was not sufficient to secure the election. On the contrary, it may have had detrimental effects at the national level. Such programs made poverty highly visible, making it plain to everyone that, government rhetoric notwithstanding, things were evidently not going well.
Maybe it is this experience with the previous elections that has made the government focus on pensions in the run-up to this year’s elections. For the 2023 campaign, the AKP government devised three reforms that, to a significant degree, represent a U-turn in pension policies.
The centerpiece is an early retirement reform. It allows people affiliated with social security institutions before September 1999 to retire already after 20 (women) or 25 (men) years after starting employment. This might mean that many would be able to retire in their forties. In fact, the beneficiaries of the reform had the right to early retirement when they entered the workforce, but a pension reform had increased the retirement age in 1999, and again in 2008 under the AKP. Many workers felt betrayed by this change, and pressured for their demand for early retirement into the political agenda. Opposition parties took up this demand and campaigned for it for years. For years, too, Erdoğan resisted this demand, stating explicitly that he would never reinstate early retirement - even if it meant losing elections.
In 2022 Erdoğan seemed to change his mind, but before the reform could pass, an earthquake hit the country on February 6, 2023, killing around 50.000 people and causing an enormous financial burden. The government still pushed through the costly reform, with an impact on the public bursary estimated in billions. The first pension payments for early retirees are scheduled to be made just in time for the elections.
With a second reform, the government has increased benefits for low-income pensioners. For decades, the amount of the basic pension had been a key parameter of Turkey’s social security: How much do those who have not contributed ‘sufficiently’ to the system get? The centrality of this question in public debate derives from Turkey’s middle-income economy. High levels of informality and intermittent formal employment make it difficult for workers to accumulate pension contributions. The state has historically stepped in to guarantee minimum pensions. Erdoğan’s AKP, however, abolished the minimum pension floor in their comprehensive 2006-2008 social security reform. The goal was to ensure that pensions reflect actual contributions, which would in turn ensure financial sustainability. The reform earned accolades from the likes of the World Bank and the IMF. But as the effects of this reform began to materialize, the government went back on its own steps and re-instated the basic pension in 2019, albeit at a very low rate of 1000 TRY (around 165 €) and initially benefitting few pensioners. Since then, the basic pension was repeatedly increased, most recently up to 7500 TRY (around 335 €).
The final piece of the government’s latest pension reform feels oddly familiar. Remember the special payments scheduled for the Islamic festivities that the AKP government had created for the 2018 elections? As in 2018, elections will take place only weeks after one such festivity. Thus, millions of pensioners will receive their benefits just before elections. This may be the reason why the government decided to nearly double the payout to 2000 TRY (around 96 €).
This benefit increase also reveals the larger challenges facing Turkey’s economy and social security system since the last general elections. When the special payment was created in 2018, it was set to 1000 TRY (around 196 €). Five years later, a nominal doubling of value means that real benefits will have halved. This is due to galloping inflation, which remains at 50% after peaking in winter. Tackling the rampaging inflation that had plagued Turkey for decades had been a proud achievement of the AKP governments. But since the 2018 elections, and as Erdoğan personally took charge of economic policy, inflation has returned. And this has impacted more than just the economy. The effects of inflation are deeply felt across society. For pensioners, for example, it has drastically affected their purchasing power. Pension benefits are adjusted to inflation, but only twice a year. This means increases only belatedly catch up to inflation rates. In addition, it is widely believed that the Statistical office downplays headline inflation – on the basis of which benefits are updated – to ensure that it stays markedly below real inflation.
Pensioners bear the brunt of this ‘austerity by stealth’. And it remains far from clear whether the pension reforms, smartly scheduled to take effect right before elections, will make voters forget or forgive the hardships they have been facing for the past five years.