On the evening of July 24, a Ministry of Health, Labour and Welfare council concluded its discussions on this fiscal year’s minimum wage. Reflecting ongoing inflation, the council agreed on a historic 50 yen increase, setting the national average hourly wage at 1,054 yen, the highest to date.
Current Situation
The minimum wage, which employers are required to pay, is currently an average of 1,004 yen per hour nationwide. Both labor and management representatives reached an agreement on a 50 yen (5%) increase, surpassing last year’s 43 yen increase. This marks the largest increase in history.
Regional Adjustments
The increase will be uniformly applied across different regions, including Tokyo and Osaka (A rank), Kyoto and Shizuoka (B rank), and Yamagata and Tottori (C rank). If implemented as planned, the national average will rise to 1,054 yen per hour, the highest ever. The decision considered the impact on consumers' cost of living, particularly for those near the minimum wage level, amid continuous price hikes in essential goods.
Broader Economic Impact
The decision aims to sustain the momentum from this year’s spring wage negotiations, where significant increases were seen. It seeks to extend these benefits to non-regular workers and small businesses. Following this guideline, local councils will conduct discussions, and regional minimum wages will be set by next month, to be applied sequentially from October.
Reactions and Future Goals
- Rengo (Japanese Trade Union Confederation):
Akira Nihei, General Policy Promotion Director, viewed the guideline as a sincere result of discussions, focusing on workers near the minimum wage. He emphasized the need for all regions to exceed 1,000 yen per hour by next year.
- Chief Cabinet Secretary Hirokazu Matsuno:
He welcomed the strong guideline and reaffirmed the government’s commitment to support small businesses by promoting price transfer of labor costs and improving labor productivity. He emphasized aiming for a 1,500 yen minimum wage by the mid-2030s.
- Constitutional Democratic Party of Japan (CDP):
Policy Research Council Chair Kiyoshi Nagae highlighted Japan’s low wage levels despite the historic increase. He urged for early achievement of a 1,500 yen minimum wage, with enhanced support for small businesses.
- Komeito:
Party leader Natsuo Yamaguchi stressed the importance of leveraging the decision to create a virtuous cycle of wages and prices, especially supporting small businesses in wage increases and productivity improvement.
- Japanese Communist Party (JCP):
Chairperson Kazuo Shii criticized the 50 yen increase as insufficient against rising prices, advocating for an immediate implementation of a nationwide uniform minimum wage of 1,500 yen and support for small businesses in raising wages.
This adjustment reflects an ongoing effort to balance the rising cost of living with sustainable wage growth, aiming for broader economic stability and fairness.