Growth burden falls on labour, not capital

Havva Gümüşkaya

Turkish Statistical Institute (TÜİK) announced third quarter growth figures. According to these figures, the economy grew by 3.7 % in the third quarter compared to the same quarter last year. In the three-month period covering July, August, and September, it grew by 1.1 % compared to the previous three-month period.

Growth was recorded in all sectors except agriculture. This performance, which came during a period of high interest rates, was interpreted as “significant,” while according to the data, the construction sector led the growth. The growth rate in the construction sector was recorded at 13.9 %.

Despite the contraction and slowdown in production, particularly in export-oriented manufacturing in the industrial sector, the growth that occurred was noteworthy. The industrial sector, which contracted by 1.8% in the first quarter of the year and grew by 6.1% in the second quarter, recorded a 6.5% growth.

Financial and insurance activities grew by 10.8%, information and communication activities by 10.1%, and taxes on products minus subsidies by 9.6%.

WE USED UP OUR INCOME

Despite no wage increases during the year, people continued to consume using credit and debt. Household consumption expenditures increased by 4.8 % in the third quarter of 2025 compared to the same quarter of the previous year.

Moderate growth based on domestic demand was recorded. Private consumption expenditures increased by 2.6%. The contribution of private consumption expenditures to annual growth was recorded at 3.2 points, the highest level this year. This indicated that domestic demand, which was being suppressed, particularly during the period of fighting inflation, remained strong. Investment expenditures contributed 2.8 points to growth, the highest contribution since the third quarter of 2023.

BIGGER CAPITAL

The benefits of growth were again written off to the capital sector, and the distribution continued to be skewed against labour. Although labour payments increased by 41.1 % annually, labour’s share of national income remained steady at 35 % compared to the same period last year, declining compared to the previous quarter. Labor income declined further toward the end of the year due to the lack of a minimum wage increase in July. Labor's share, which was 38.4% in the second quarter of the year, fell to 35%. In contrast, the share of operating profits rose from 41.3% to 46.7%.

THE TRAGIC END OF AGRICULTURE

The decline in the agriculture sector continued to accelerate in the third quarter of the year. In the first nine months of this year, agriculture clearly presented the most negative picture among the main sectors. According to TÜİK data, the shrinkage in agriculture, which was 0.7 % in the first quarter, reached 5.5 % in the second quarter and 12.7 % in the third quarter.

The cost of this negative trend in the agricultural sector is increasing exponentially. Sharp price increases in all inputs, particularly diesel fuel, fertilizer, seeds, feed, pesticides, irrigation, and energy, are disrupting farmers' cost calculations, while frequent frosts, irregular rainfall, and prolonged droughts are accelerating the shrinkage of the agricultural sector.

Speaking to Ekonomim Newspaper about the crisis in agricultural production, Migros Executive Board Chairman Özgür Tort made some remarkable statements. Highlighting the importance of transportation and mass production in price formation, Tort referred to the price difference between Antalya and Istanbul, saying, "The product costs 5 lira in Antalya and 35 lira in Istanbul. The math is very simple. Without efficient production, the cost of selling a zero-cost product in Istanbul is 21 lira. Producers won't produce for 5 lira. We must reduce supply costs and joint production costs."

Tort stated that producers don't want to produce because they can't make money, emphasizing that this has become a major threat to both the sector and the country. Tort said, “If we continue at this pace, we may not find products to sell in Turkey. We are concerned that we may then have to make food one of the partners in the import frenzy.”

THE WORST FIGURE IN THE LAST EIGHT YEARS

Cem Oyvat, a lecturer at Greenwich University, discussed the growth figures. Referring to the shrinkage in the agricultural sector and developments in the industrial sector, Oyvat said:

"The 12.7 % decline in agriculture stands out in the growth figures. When comparing the third quarters, agricultural production has fallen to its lowest level in the last eight years. On the other hand, there is a 6.5% growth in the industrial sector, but the base effect plays a role in this situation. In other words, this growth comes on top of the contraction in the third quarter of 2024. Indeed, looking at the third-quarter performance of the industrial sector, the average growth over the last two years is 1.8 %—a low figure for Turkey. The share of national income received by wage earners has continued to decline since the last quarter of 2024. According to seasonally adjusted data, the share of labour payments in GDP, which was 33.7% in the last quarter of 2024, fell to 33.0% in the second quarter of 2025 and to 32.6% in the third quarter of 2025. We are seeing the effects of the minimum wage increase being kept low at the beginning of 2025 and no interim increases being granted. There was also 10.8% growth in the financial sector. This growth may be due to credit interest rates remaining well above inflation and an increase in public interest payments. The increase in public consumption expenditures is also quite limited. For example, in the first three quarters of 2025, public consumption expenditures increased by 0.8% in real terms compared to the previous year, while GDP grew by 3.7%. Looking at the three-year period, we see that public consumption expenditures consistently remained below the growth rate during Mehmet Şimşek's tenure. Therefore, the criticism that inflation is falling because public expenditures are high is not accurate.

Note: This article is translated from the original article titled Büyüme yükü emekte, neması sermayede, published in BirGün newspaper on December 2, 2025.