Japan panel calls for 3% hike in average minimum wage

FILE PHOTO: Worker cycles near a factory at the Keihin industrial zone in Kawasaki
FILE PHOTO: A worker cycles near a factory at the Keihin industrial zone in Kawasaki, Japan February 17, 2016. REUTERS/Toru Hanai

July 14, 2021

TOKYO (Reuters) -A subcommittee under Japan’s labour ministry recommended on Wednesday the national average minimum wage be raised around 3% to almost $8.50 per hour this fiscal year, a government official said.

Its recommendation follows repeated calls from Prime Minister Yoshihide Suga to raise the country’s minimum wage to 1,000 yen ($9.05), as policymakers seek to ensure households can boost consumption when the COVID-19 pandemic’s drag on the economy fades.

The influential subcommittee of the Ministry of Health, Labour and Welfare’s Central Minimum Wage Council proposed to raise the minimum wage by 28 yen to 930 yen ($8.42) from 902 yen in fiscal 2021 that runs through March next year, a ministry official said.

Under Suga’s predecessor Shinzo Abe, the government increased the minimum wage by 3% for four years until the COVID-19 pandemic hit in 2020, when it was held largely steady.

“It will be better if the minimum wage is raised to a certain degree, so this is a positive outcome,” said Taro Saito, executive research fellow at the NLI Research Institute.

While policymakers are counting on wage hikes to sustain a domestic economic recovery, the calls for a higher minimum wage come at a time when many small- and mid-size firms are struggling to overcome the pandemic.

Saito also added it was not realistic to expect the minimum wage to be raised to 1,000 yen in one go.

“Overall, the corporate performance of companies is returning to what it was before the pandemic, so it’s the right move to bring back wage increases to what they were in normal times,” he said.

($1 = 110.4800 yen)

(Reporting by Daniel Leussink; Editing by Jacqueline Wong)