Japan gov’t panel OKs sharpest minimum wage rise amid inflation

TOKYO (Kyodo) — A Japanese government panel on Wednesday agreed to hike the country’s minimum wage by 50 yen (32 cents), the sharpest rise ever that will bring the average hourly pay to a record 1,054 yen from 1,004 yen, as many workers feel the pinch of soaring prices, sources familiar with the matter said.

The move follows historic pay rises by private companies in this year’s spring wage talks. According to a survey by the Japanese Trade Union Confederation, the country’s biggest labor union, businesses agreed on an average 5.10 percent rise, the first time in 33 years that the hike exceeded 5 percent.

Corporate executives have been pressured by the government and labor unions to raise wages as Japan saw its core consumer prices rise 3.1 percent last year, the sharpest increase in 41 years, driving up costs of everything from eggs to hotel accommodations.

While the rise in the minimum wage is expected to alleviate the financial burden on laborers across many industries, from convenience stores to nursing homes, data shows the recent trend of hefty pay raises has not yet kept pace with inflation.

Japan’s real wages in May fell 1.4 percent from a year earlier, declining for a record 26th straight month, according to data from the Ministry of Health, Labor and Welfare released earlier this month.

The average minimum hourly wage rose 43 yen to 1,004 yen in fiscal 2023, topping the 1,000 yen mark for the first time. Prime Minister Fumio Kishida’s government has said it aims to bring the figure up to 1,500 yen by the mid-2030s.

The minimum wage is set by each of the 47 prefectures in Japan, with the figure revised every fiscal year.

A government panel shows guideline figures for the prefectures each year, and the final figures are agreed on at each prefectural panel around August to enter into effect from October onward.