Japan Minimum Wage Challenges: Ideas Later.

Japan's minimum wage race heats up as businesses feel the strain

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AKITA (Kyodo) -- To stem the outflow of young people from regional areas amid a tight labor market, prefectures in Japan are engaged in a minimum wage race in which even one yen can make a difference.

Akita Prefecture in northeastern Japan, having been in a battle for last place for several years, climbed out of the country's bottom ranking for hourly pay. But the move also sparked backlash from business leaders, resulting in the prefecture's advisory council delaying implementation of the wage hike for six months.

Akita, which had the lowest minimum wage in the country at 951 yen ($6) per hour in fiscal year 2024, raised it by 80 yen to 1,031 yen. The increase came as a surprise to Tomokazu Terada, president of Marudai, which operates five supermarkets in the capital city of Akita. He said the company was already struggling with soaring labor costs.

"I think the employees are happy, but management isn't reaping any benefits from climbing out of last place," Terada said. "It gives the impression that (the government) is charging ahead without regard for the real economy or business performance."

Japan's national weighted average minimum hourly wage is 1,121 yen, with regional rates ranging from 1,023 yen in prefectures like Okinawa in southern Japan to 1,226 yen in Tokyo, the highest. Driven partly by comparisons with neighboring prefectures, the competition to raise wages has intensified, and hourly pay has topped 1,000 yen in all 47 prefectures.

As the lowest hourly wage set by Japanese law, the minimum wage applies to nearly all workers, including full-time employees, part-time workers, temporary workers and foreign employees.

For workers, it is a lifeline that allows them to earn a living. From the perspective of small and midsized businesses, it can be viewed as a labor cost imposed by the government.

At Marudai, more than 80 percent of some 400 employees are non-regular workers, and many of them earn hourly wages close to the minimum wage.

"This means an increase of several million yen in monthly labor costs. Our financial situation is already on edge," Terada said.

Once a year, a national advisory panel under the labor ministry recommends guideline increases, which prefectural councils use in setting local minimum wages.

On July 28, the panel recommended raising the national average by 4.9 percent to 1,176 yen this fiscal year, a 55-yen increase and the second-largest on record. Prefectural councils are expected to set their minimum wages mainly this month.

Tomoaki Usuki, an Akita University professor who chairs the prefecture's advisory council, said senior prefectural officials had approached him early in the deliberations last fiscal year. "There was a strong request that we proceed with our deliberations with the aim of moving the prefecture out of last place," he said.

Article source:  https://mainichi.jp/english/articles/20260828/p2g/00m/0bu/029000c