Job Discussion Forums

[nichtta]

Hey Everyone,

I just wanted to give a little example to demonstrate this.

Let's say that you have a 10-month or 12-month teaching contract that started on September 1st, 2014 with a stable, net monthly salary of 3,200 TL.

Now, you get a "raise" or are considering another, more competitive offer for this next year with a stable, net monthly salary of 4,000 TL.

Your international spending power will actually have decreased if the lira's trend of decreasing in value these recent years continues even though your salary increased by 800 TL / month.

The exchange rate on September 1st, 2014 according to XE.com was $1 (USD) = 2.15966 TL

Therefore, your salary of 3,200 TL was equal to approximately $1,481.71 / month in September. Of course, it then began decreasing in value over the months as the lira decreased in value.

Today's exchange rate according to XE.com is $1 = 2.71349 TL

That means, a salary of 4,000 TL today is equal to approximately $1,474.12 / month based on today's exchange rate, which is less than 3,200 TL was worth on September 1st, 2014. Even today your monthly salary of 3,200 TL is equal to only $1,179.29 / month based on today's exchange rate.

This is something we really need to consider when looking at potential contracts or packages from employers. I know we're living here in Turkey where the Turkish lira is obviously the standard currency used for transactions, but, as foreign ESL teachers, we should ask for our monthly salaries to be based on USD, EUR, GBP, CAD, or AUD. This should be matched every month and not just set at the beginning of the year. Thereafter, either payment can be made in TL based on that day's exchange rate or it can be paid in the foreign currency. This is how it appears to be done in other countries, but I'm not sure.

[svenhassel]

If there is ever a situation in which the supply of teachers drops and we are suddenly valued in Turkey it would be possible to make such demands. As it stands all teachers in all language schools/most K12's/ and universities are replaceable.

Wages are low because people are prepared to work for low wages and this makes Turkey totally unsustainable for longterm prospects.

If you think Foreign teachers have it bad bear in mind all the Dollars which were borrowed for all the construction. Those debts have to be repaid one year from now and with the lira currently at 60% of the value when the money was borrowed..... it doesn't look good.

As I said, Turkey is unsustainable

[billy orr]

Welcome to the precariat.

[Kim Macintosh]

Hey Svenhassel.....

I need to be educated: please expatiate about "debts" coming due.

There was a lot of direct foreign investment pre-taksim. Is that what you mean? Or is it the general construction we see everywhere, which typically spends a lot of time in the pipeline?

[Dedicated]

Following last week's shattering parliamentary election, which decisively repudiated Turkey's increasingly erratic and authoritarian President Erdogan, the country is entering a new era of greatly heightened political uncertainty coupled with Turkey's massive current account deficit.

Turkey is one of the 'Fragile Five', along with India, Indonesia, South Africa and Brazil, major emerging market economies dependent on massive capital inflows. Cheap money flowing across their borders became a narcotic for the Fragile Five. However, monetary tightening is continuing with US interest rates likely to rise from September this year. The party for the Fragile Five is over and Turkey has simply not fixed their roofs while the sun shone, forgoing the structural reforms necessary to compete in the coming more dangerous global environment.

The Turkish lira has slumped to a record low against the dollar, having lost 14 per cent of its value against the dollar this year alone. Turkey grew at a better than expected 2.3 per cent annualized in the first quarter of this year, but this is well down o the above 4 per cent rates it enjoyed as recently as 2013. Turkish firms' net foreign exchange liabilities stood at 183 billion US dollars at the end of 2014. The country remains highly dependent on foreign capital, with the current account deficit hitting a dangerous 7.9 per cent of GDP in 2013.

The Turkish water buffalo has run into real trouble so don't be surprised if the market lion pounces over the next few months.

[Kim Macintosh]

I think this may be what they call hijacking a thread, but it's interesting and pertinent.....

The things you note are real and visible to anyone living in Turkey: it defines the landscape. What I am interesting in is the timing. Assuming exchange rates reflect investor confidence, or lack thereof, AKP actions over the past couple of years explain things beautifully.

What I want to know about now is evidence of a wave of such loans coming due, or some other factor that we might anticipate, which stands to decisively blow the whistle on the current party.

[sixthchild]

Hi, felt the need to pitch in some points relating to this thread. The elections result well may mean that the present ruling party may be not running the country for much longer. If the current comments coming from the Turkish press are correct then the oppostion parties can put aside their differences and form a coalition, then what will that do for overseas investment confidence? Make a bad situation worse?

[Dedicated]

It was absolutely not my intention to hijack the thread, but felt the background to the decreasing value of the lira was necessary.

The AKP lost its overall majority in parliament and must now try to cobble together a coalition with one of the three parties that have all stated they will not work with. As a result, either a very weak government will be formed or new elections loom on the horizon. In either case, Turkey's vaunted political stability is no more.

Of course this will affect overseas investment confidence. However, it is anybody's guess when actual loans will become due, but we can certainly anticipate them.

[Kim Macintosh]

[quote]If the current comments coming from the Turkish press are correct then the oppostion parties can put aside their differences and form a coalition, then what will that do for overseas investment confidence? Make a bad situation worse? [/quote]
How about make it better? Get an early discounted seat on a new and improved train.

I get dedicated's point about political gridlock, but what AKP says is pretty much what you'd expect. At least the course they were on has been stymied and I'd have expected to see a rebound in FX rates on that basis, at least on the margins. With no change to speak of in FX, coupled with all the spending they've been doing and the lack of legitimacy of such lending in far more developed settings than Turkey, I'll buy your underlying point.

[sixthchild]

The message that is coming across states that with a re-election the AKP only needs a 3 to 5 percent swing in its favour to claw back an overall majority and then those who dared to oppose them had better run for cover. The opposition seems blind to this simple reality and will be unable to see past their political differences and party line rethoric to form a cohesive and stable government, the MHP especially seems very inflexible about the Kurdish party, therefore despite the fact that 60 percent of the population do not want the ruling party to remain in power they will because the children disguised as politicians cannot agree!

[Kim Macintosh]

"Childishness" on the part of the opposition; followed by "vindictiveness" on the part of the AKP when they manage (inevitably, through cohesiveness) to regain the upper hand, at which point they begin implementation of their vision with a then unrestrained vengeance?

The conclusion here is that hoping of the best and assuming the worst may be the most prudent course.

[JohnRambo]

[Kim Macintosh]

Not that I'm terribly informed......but it seems to me that AKP had swung its weight around a great, great deal over the years, in terms of patronage at the very least. Aside from the ideological barriers to forging a consensus, I cannot help but think the other parties would demand pay-back. It's too much for my mind to get around the idea of them somehow reaching an accommodation.

[JohnRambo]

[svenhassel]

sorry Kim Mac, been away from the desk but the debt thing looks like this: http://www.bloomberg.com/news/articles/2015-04-06/lira-descent-risks-turkish-growth-as-89-billion-debt-bill-looms