Impressive GDP growth in Turkey, dramatic shrinking in labor's share

While Turkey had an impressive 7.6% growth in the second quarter of 2022 compared to the same quarter of 2021, the share of labor in GDP has seen a dramatic decline in the last two years.

The labor's share that had been 36.8% in the second quarter of 2020, a period marked by the beginning of the COVID-19 pandemic, declined to 25.4% in 2022's second quarter, with a fall of 11.4 percentage points in two years.

The share of capital, on the other hand, rose from 42.9% to 54% in the same period of time.

While capital earning increased, in current prices, by 134.7% compared to Q2 of 2021, labor earnings increased by merely 66.4% as annual inflation soared, according to highly controversial official figures, to 79.6% in July. It is noteworthy that an independent research group, ENAG, put the annual inflation rate at 176% in July.

The quarter-on-quarter real GDP growth in Q2 of 2022 was measured 1.5% in OECD area, 2.0% in the European Union, and 1.6 in G7 countries.