To use this site, please disable the ad blocking feature and reload the page.
This website uses cookies to collect information about your visit for purposes such as showing you personalized ads and content, and analyzing our website traffic. By clicking “Accept all,” you will allow the use of these cookies.
Users accessing this site from EEA countries and UK are unable to view this site without your consent. We apologize for any inconvenience caused.
If companies do nothing but suppress labor costs, it is unlikely that a virtuous economic cycle will be realized. It is hoped that a large increase in minimum wages will be used as an opportunity to promote the reform of the Japanese economy, which has been heavily weighted toward cost-cutting.
The Central Minimum Wages Council of the Health, Labor and Welfare Ministry has compiled a guideline for raising the national average minimum wage from the current ¥1,004 to ¥1,054 in fiscal 2024.
The increase is ¥50, greater than last fiscal year’s ¥43, and the largest increase ever. The rate of increase is 5%.
Minimum wages are the lower limits of wages applicable to all workers, including both regular and nonregular workers.
With prices continuing to rise, real wages, calculated to take the effect of prices into account, saw negative growth for more than two years until May this year, which has been hard on household budgets. It is noteworthy that the ministry’s council has agreed to a large increase in the minimum wage.
In this year’s shunto spring wage negotiations, the highest average wage increases in 33 years were realized. The spread of this trend to nonregular workers and small and midsize enterprises can be expected.
At the council meeting, the workers’ side insisted on a ¥67 increase, while the employers’ side demanded a ¥23 increase, making the talks difficult.
The employers have strong concerns that an excessive increase could lead to bankruptcies and business closures, resulting in the loss of local employment. The government has a responsibility to create an environment in which small and midsize firms can secure funds for their wage increases.
The government needs to take effective measures to increase corporate productivity, as well as thoroughly monitoring transactions between large companies and small and midsize firms to ensure that the latter will be able to appropriately pass on higher costs, including labor costs, in their prices.
Japan is at a critical juncture in its transition away from a “cost-cutting economy” in which labor and raw material costs are reduced to sell underpriced products.
It is necessary to shift to a “growth-oriented economy” that promotes wage increases and investment and provides attractive products and services, rather than competing for lower prices. To that end, it is important for corporate executives, regardless of the size of their companies, to reform their awareness of how wages should be paid.
The government currently has a goal of achieving a national average minimum wage of ¥1,500 as early as possible within the 2030s. To increase the number of foreigners who want to work in Japan, it is essential to raise wages, which are currently lower than those in Europe and the United States.
In previous years, the council divided Japan’s 47 prefectures into three groups according to their economic conditions and provided separate guidelines for raising minimum wages. This time, however, to correct regional differences and raise the bottom line, the same ¥50 increase was set for all prefectures across the board.
It is hoped that local councils will actively consider raising their minimum wages from the viewpoint that this is important for regional vitalization.
