HAK-İŞ General President Arslan: “It is an ideal system for 4 workers to finance one retiree.”

Mahmut Arslan, the Chairman of the HAK-İŞ Trade Union Confederation, stated, “A system where 4 employees finance one retiree is the most ideal system. Before the implementation of the EYT, in 2020, our active-passive balance was 2.37. This means 2.37 workers finance one retiree. In 2023, this drops to 1.82.”

HAK-İŞ Chairman Mahmut Arslan shared this during a press conference where he presented the ‘Current Problems and Solution Proposals Report of the Pension System’, which addresses the issues and solutions of the retirement system in Turkey, conducted by HAK-İŞ Academy. Arslan noted that HAK-İŞ Academy carried out a study regarding the situation of the monthly pension system during periods of inflation, the problems within the retirement system, and the social security system, as well as their solutions. Emphasizing that HAK-İŞ has raised many issues in various platforms regarding the social security system, Arslan stated, “HAK-İŞ has always taken a constructive role in improving the conditions of our social security system. It has not only identified the problems but also proposed solutions.”

Arslan pointed out that despite all the negative aspects, the Social Security Institution achieved significant successes with some studies conducted in 1999, 2008, and afterwards, mentioning that the coverage of the Social Security Institution increased from around 70% in 2002 to 89%.

“The share of retirees from the gross national product is not significantly increasing”
Arslan recalled that the share of retirees from the gross national product was 7.6% in 2009, stating, “In 2023, it drops to 6.4, and as of August 2024, it is 6.8. Therefore, despite the general increase in Turkey’s national income, our social security expenditures will drop to 6.4% in 2023 and to 6.8% in 2025. This indicates that there is unfortunately no significant increase or resource allocation in our social security system parallel to other developments.”

“Undeclared employment disrupts our actuarial balance”
Arslan mentioned the public perception that the actuarial balance of the social security system is disrupted by the EYT and retirees’ salaries, stating, “This is not correct. Our actuarial balance is disrupted by two fundamental issues. The first is undeclared employment. Turkey still faces a problem of undeclared employment that is twice that of OECD countries – if we consider the OECD average to be around 15%, Turkey faces a 30% undeclared employment issue. Undeclared employment means not receiving contributions and not paying taxes. Therefore, Turkey’s most fundamental issue regarding retirement is not retirees’ salaries, but undeclared employment.”

“If the contribution revenues are collected, the receivables of our Social Security Institution reach 600 billion”
Pointing out that the second issue disrupting the actuarial balance is the failure to collect contribution revenues, Arslan noted, “We have data for 2023. When you look at it comprehensively, the receivables of our Social Security Institution reach 600 billion. If you had that 600 billion in contributions, you could increase today’s retiree salaries by 50%. Moreover, when you eliminate significant undeclared employment, these figures rise to over 1.5 trillion. Therefore, if we eliminate undeclared employment or reduce it to a minimum, and if we collect our receivables, we would change the public perception that ‘it is bad, it has collapsed, and it has disappeared’.”

“A system where 4 workers finance one retiree is an ideal system”
Regarding the active-passive balance in the retirement system, Arslan said, “In the contributory systems around the world, we talk about a model where 4 workers finance one retiree. However, this model is not achieved in any part of the world. If it were, that would be ideal. Yes, a system where 4 workers finance one retiree is indeed ideal. However, we have never achieved this. Before the implementation of EYT, in 2020, our active-passive balance was 2.37. This means that 2.37 workers finance one retiree. In 2023, this drops to 1.82. This decline is due to EYT. Therefore, our 1.82 workers are obliged to finance one retiree. This indicates a serious problem that signals alarm bells.”

“If we open the way for union organization in Turkey, we can solve the problems”
Stating that according to the figures provided by the European Statistics Office, the actuarial balance in the European Union averages around 1.93, Arslan noted that almost no democratic country has managed to achieve a ratio where 4 workers finance one retiree. He asked, “Should Turkey be proud of this? Certainly not. But to place all the blame solely on EYT is a great injustice. As HAK-İŞ, if we open the way for union organization in Turkey, if union organization rises from 15% to 50% or more, we can solve three fundamental problems.”

Arslan emphasized that if union organization is facilitated, the collective bargaining system will be expanded, marking an important step to prevent income distribution inequality.

“The system was designed without considering that inflation would rise or fall significantly”
Arslan addressed the grievances caused by lower pensions due to inflation for those retiring in 2025, saying, “HAK-İŞ sees this issue as a fundamental solution. Today, a worker who retires in 2024, if they retire in 2025, faces up to a 35% income loss, and we are talking about a major reform rather than just a discussion of salary loss. This year’s solution to this problem brings other issues to our agenda for next year. The system was calculated based on the conjuncture of that day when the reform was made in 2008, unfortunately without considering that inflation could rise or fall significantly, and today we find ourselves hitting a wall.”

“The longer people continue to work before retirement, the more salary they will receive”
Arslan emphasized that a fundamental regulation is needed in the retirement system, stating: “Our regulation is this; the longer people stay in the system, meaning the longer they continue to work before retirement, the more salary they will receive. This should inherently be how it works. Paying more contributions and receiving less salary is really not the right approach. This should be abandoned. We do not know why our government has refrained from solving this critical issue. We have only two months left. November and December. Perhaps a regulation can be made by the end of December. We have expectations. If not, those who criticize early retirement and say that EYT has added a new burden to our social security system, as well as those who blame the unions regarding retirees, and even blame us for defending EYT, will throw the country into a crisis.”

Following Arslan’s speech, Labor and Social Security Expert Sadettin Orhan presented a report on the ‘Current Problems and Solution Proposals of the Pension System’. Orhan emphasized that in the short term, preventing monthly losses after 2024, revising the pension calculation and updating system in the medium term, establishing a Social Policy Coordination Board, and in the long term, reforming the social security system under the Social Security Council should be prioritized.