Japan Minimum Wage increase: Update Sept. 11, 2025.

Japan's minimum hourly wage hits record 1,121 yen amid rising prices

Article source: https://mainichi.jp/english/articles/20250905/p2g/00m/0bu/055000c

Ideas

The increase in the minimum wage is both a positive and negative depending on which side of the coin you are on.

For many companies it's a negative as an increase in the minimum wage is an increased cost that many companies can't afford as it increases their profits margins and puts more pressure on companies.

For wage earners and especially part-time or even contract workers it's a needed wage increase as many of them rely on the minimum wage as their only source of income.

Some would say, and rightly so, the minimum wage should be a living wage meaning it should be high enough for workers to pay their bills, pay their rent, and other expenses in life.

Wage hikes are good and needed but again its depends on which side of the coin you are on, as wage hikes are a major cost for companies, and especially small and mid-size companies which some really can't afford as there profit margins are already stretched thin with increases in labor, raw materials, and energy costs.

Maybe the large companies can easily handle the wage increases but again its a major stress for many companies that can't afford them.

It must be remembered that up to 70 percent of workers in Japan don't work for the large name-brand companies but work for small and midsize companies which most likely can't match the wage increases of the large Japanese companies, which might mean if they do get an wage increase inflation might still be a major challenge for them.

South Korea back around 2015 or so tried to increase the minimum wage with mixed success and they provided subsidies for small companies that were having challenges with it. 

South Korea increased the wage a little over several years but many companies had to reduce the hours of some workers, reduce hiring, even laid of some workers and they claimed it was too much too soon for them.

South Korea has even started to experiment with many forms of automation as a way to reduce labor costs with robots at restaurants, self-check out convience stores, and self kiosks at fast food places.

The 7.3 percent increase might be too much for many companies as they are again struggling with raw material costs, increased labor costs, and high energy costs now. 

It's good that different prefectures were able to see difference in wage increases as the cost of living in Tokyo is much higher than the cost of living in some more rural prefecture, which are like states in the US.

But again, is a minimum wage of 1,226 enough for some to live on as maybe some workers who get the minimum wage might be single women with children, women how need to work part-time to help their families, and even university students who need to pay for their college expenses, and then there the fixed income group who need to continue to work and rely on the minimum wage to survive.

The major challenge or problem is not really with the minimum wage increase its the constant increase in raw materials and energy costs that just keep increasing each month in Japan which puts too much pressure on companies and then when there is minimum wage increase they have no room in their profit margin to to increase wages.

And then there is the possibility that some small companies are held hostage by the large name-brand companies as they don't want to accept the small companies strategies of pass-on their costs to the next in the supply chain which could be the large companies.

Many small companies in Japan are suppliers to the large companies as they make one or two products only for the large companies and some large companies refuse to accept the increase in prices that the small companies need to do to survive.

Unfortunately, it seems like each new Prime Minister makes the same pledge but nothing really gets done as the small Japanese companies are still struggling with high labor costs, high energy costs, and high raw material costs.

Again, in South Korea the government gave subsidies to help the small companies with the minimum wage increases but it didn't seem to really help much as they again had to lay off workers, reduce the hours of workers, and even stopped hiring new workers.

Again, its good that each prefecture can have a different wage as the standard of living in Tokyo is much different than the smaller rural prefectures in Japan, which of course many companies, if they had to use the same minimum wage as in Tokyo  might go out of business.

On the surface there appears to some real challenges for many small companies in Japan as they just don't have the same benefits as the large companies have. That might be just the nature of the market and large companies have more resources available while many small companies might just be living from month to month just trying to survive in Japan.

Small companies are the heart of any economy as there are more small companies than the so-called name brand companies which of course get all of the news and all the benefits while the small companies just get the scraps if any.

If Japan want to see its economy grow again, its needs to find a more balanced economy which not only favors the large companies but the small and mid-size companies too.

Germany has been able to find the right mix of small and mid-size companies and they all exist together as the large and the small are the in value. 

Japan needs to find that same mix values small companies just as much as large companies at this time is screwed toward the large companies only.

As a result, at this time, Japan has an economy of haves, the large name-brand companies and the have nots, the small and midi-size companies, which don't have the same resources as the large companies do.

Have a nice day!

Japan's Minimum Wage: Updated July 18, 2024.

 

Editorial: Japan's minimum wage must be increased as prices rise, livelihoods flounder

Article Source:  https://mainichi.jp/english/articles/20240716/p2a/00m/0op/016000c#cxrecs_s

Ideas:

The minimum wage situation has always been a difficult topic as companies don't want to pay and governments are trying to figure out what is the optimum wage for a worker, who might not have the best skills for an economy or society, but need to be able to live normal lives.

Maybe, just maybe many years ago, the minimum wage was enough to live on, barely, but now with cost of living consistently increasing it becomes impossible for someone to live a normal life on the current minimum wage levels.

As each prefecture might have different levels of economic activity, and different cost of living situations, what is good for Tokyo and Osaka might not be a good minimum wage for one of the rural prefectures.

Its unfortunate, but understandable that small and mid-size companies have to pay a minimum wage as maybe their profit margins are very thin, and part of the problem might be they are suppliers to larger companies that maybe force them to keep costs down that they charge the larger companies.

Of course non-regular employees might always be at the bottom of a company, with little or no benefits and then only minimum wages.

It seems full-time workers, who might look like regular employees don't have the same wage as other full-time workers, as maybe many service type companies employ women who might not have the best skills but they need to work for their families.

The minimum wage gap between different prefectures is only a small part as to why younger people might be leaving the rural areas to try and work in a large metropolitan area, as they are looking for better opportunities and not just wages.

The employment situation in Japan, like other economies is a very complicated situation, as maybe many small and midsize companies know what the situation is but their profit margins just can't handle any more wage increases.

At the same time, to get new and better talent to work for their company they know they need to increase wages, including the minimum wage.

Improved productivity, utilizing government subsidies, and other measures are good, but will they solve Japan's work place challenges.

Its a puzzle that is not easy to solve as there are many variables to consider to get the Japanese workplace up to international standards.

Passing on increased labor costs and or material cost increases to business partners is always a challenge as maybe large companies put a lot of pressure on small companies to keep costs lows which means maybe small companies can't increase wages and if they try to pass on their costs to large company partners they might be be told your contract with us as a supplier will not be renewed.

Yes, if possible, the Fair Trade Commission should do what it can to monitor price or contract negotiations, as unfortunately, there are some large companies will try to use their large company position or market power position to influence what smaller companies can do.

The minimum wage needs to increase in Japan, like regular wage increases need to increase as wages in Japan are far below international standards.

Again, its a very complicated puzzle that didn't happen just yesterday, as the situation has been developing for decades and Japan used to be higher in wage international standards but now its at the bottom related to OECD or advanced economies.

Have a nice day and be safe!