With everyday prices soaring, a pay increase is only natural

With prices continuing to rise, a substantial increase in minimum wages is a natural response to protect the livelihoods of workers. The government should do everything in its power to help small and midsize companies weather the increase in wages.

The Health, Labor and Welfare Ministry’s Central Minimum Wages Council has submitted a report to labor minister Shigeyuki Goto proposing an increase of ¥31 to the hourly minimum wage this fiscal year, raising the national average to ¥961. This is the largest increase ever proposed by the council, topping the record set last fiscal year when it proposed a ¥28 increase.

Average wages have remained low in Japan compared to those in major Western countries. Sluggish wage growth, combined with high prices, has made it increasingly difficult for households to make ends meet.

The substantial increase in minimum wages is probably due to the fact that both labor and management sides shared a view that an increase was necessary. Employers are believed to have expressed their understanding of the matter from the viewpoint of securing human resources.

Business organizations have long been cautious about increasing labor costs, saying it would put pressure on business performance. Meanwhile, companies’ internal reserves are at an all-time high.

It is true that sluggish wage growth is one of the factors that has contributed to economic stagnation. It is hoped that a virtuous economic cycle will be achieved in which the benefits of wage hikes widely spread, stimulating consumption.

Minimum wages are a wage base that applies to all workers, including regular and non-regular staff. The government has set a goal of raising the national average minimum wage to at least ¥1,000 as soon as possible.

It is hoped that by steadily increasing the minimum wages, the government will strengthen the livelihoods of non-regular workers, who tend to have low incomes.

There are many businesses that have seen their financial strength weaken due to rising costs stemming from soaring prices and the prolonged coronavirus pandemic. A situation must be avoided in which an increase in labor costs leads to a contraction in employment.

The government has been implementing various measures, offering tax breaks to encourage wage increases and subsidies to companies that raise wages and make capital investments. However, it is hard to say that such measures have been producing results. It is hoped that the government will listen to the wishes of companies and consider creating a system that is easy for them to use.

Another problem is that subcontractors, who are in a weaker position compared to prime contractors, cannot pass on increases in labor and raw material costs in transaction prices. The government should strengthen its fact-finding investigation into the current situation.

Based on the council’s minimum wage proposal, prefectural councils will discuss the matter and officially decide the minimum wages in each region. At present, Tokyo has the highest minimum wage at ¥1,041, while Kochi and Okinawa prefectures have the lowest at ¥820.

Excessive regional disparities could cause workers to shy away from rural areas. It is hoped that local councils will deepen their discussions on the issue from the perspective that wage hikes are important for regional vitalization.

(From The Yomiuri Shimbun, Aug. 3, 2022)