THE LOSS IN PURCHASING POWER OF PUBLIC EMPLOYEES DESPITE ADJUSTMENT IN SALARIES TO INFLATION RATE: A CASE OF TURKEY

Inflation, which refers to a sustained and noticeable increase in the overall price levels within a country, erodes the real purchasing power of its citizens. Consequently, governments in countries experiencing high inflation typically strive to mitigate these losses by increasing nominal wages and salaries. This study highlights that, in environments with high inflation rates, particularly within the public sector, biannual salary increases do not fully offset the impact of inflation on purchasing power. Employing time value of money techniques in engineering economics, the study demonstrates that inflation raises are insufficient to fully restore purchasing power, and provides policy recommendations as a result. The unique and original nature of this study makes it a valuable contribution to the existing literature in this field.