On Wednesday, Ford Otosan, a joint venture between Ford and Turkey’s Koc Holding, became the latest automaker to halt production due to a workers’ strike that is spreading across the industry in Turkey. The strike began last Thursday in Bursa, where Oyak Renault (a joint venture of France’s Renault and the Turkish army pension fund) operates the country’s largest car factory.
Renault workers complained about low wages, and were galled that their counterparts at a nearby Bosch car-parts plant, represented by the same union (Metal Workers Trade Union of Turkey, or Türk Metal), received a 60% pay raise — even though Renault’s hourly wages remained slightly higher. Roughly 7,000 Turkish workers have resigned from the union in protest, in addition to going on strike. Regardless, the union continues to support the deal that it reached with employers in October, and is calling for an end to the “illegal” protest. Türk Metal also warned that the strike was damaging Turkey’s international reputation and competitiveness. Not to mention Turkey’s Prime Minister Recep Tayyip Erdogan himself.
Ever since Erdogan and his AKP party came to power in 2002, the auto sector has been given high priority in the nation’s industrial growth strategy. Vehicle production grew from 346,565 in 2002 to 1.17 million in 2014, and roughly 80% are exported, mostly to Western European countries. Autos and car-parts now account for a solid 10% of the country’s exports.
Taking advantage of low wages and relative labor peace, foreign automakers have invested heavily in building export factories in Turkey. In November, Tofas said it would invest $520 million to add two new models to its production lines, and in January, Toyota said it would invest $500 million to increase its annual capacity by about 50% to 250,000 cars, according to the Wall Street Journal. However, this strike is already reducing production by thousands of vehicles, and it may give other automakers pause before investing in Turkey.
Due to the automotive sector’s importance to Turkey, the government has gotten involved directly in mediation dispatching two ministers for meetings with employers and unions to help negotiate an end to the walkouts. Deputy Prime Minister Ali Babacan said on Wednesday, “I’m hoping that they will reach a reasonable solution in the coming days.” There is another major factor adding urgency to the government’s efforts to resolve the dispute — legislative elections that are coming up on June 7. The strike is embarrassing for the incumbent AKP government, whose decade-long strong economic record has recently been weakening. “We have doubts whether this is just an issue between the employees and employers, or if there is ideological reason behind this. The timing of these protests is significant,” Babacan stated.
The autoworkers’ strike is not the only labor-related headache for Turkey’s current government — on Wednesday, some 70,000 primary care physicians across the country began a three-day strike. They are protesting against working on weekends, which the Health Ministry made obligatory at the start of this year. The penalty points issued to doctors for failing to show up for the eight-hour Saturday shifts were increased four-fold on April 16, with high cumulative totals leading to termination.
How the Turkish government responds to these two strikes will say much about its ability to govern, and its prospects in the upcoming elections.