Editorial: Government must provide support to raise minimum wage in Japan

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Discussions on raising the minimum wage in Japan this fiscal year are nearing their final stage among members of a panel from the Ministry of Health, Labor and Welfare.

The economy is recovering from the coronavirus crisis and high commodity prices are putting pressure on household finances. Measures are needed to remedy the situation.

The minimum wage plays an important role in sustaining people’s lives. Last year, the national average was increased by 28 yen to 930 yen (about $6.80) per hour, but this has nothing to do with the rates in Europe and the United States.

Often the minimum wage is applied to non-regular employees, such as part-time workers, whose lives are directly affected by large increases in food and energy prices.

In the case of regular employees, the mechanism of the “spring wage offensive” allows direct negotiations between employees and management, and thanks to this annual campaign, wage increases have continued. Unless the minimum wage is increased, the disparity will only widen.

Correcting regional disparities is also an issue. There is more than 200 yen (about $1.50) difference in minimum hourly wage between Tokyo, which has the highest level at 1,041 yen (about $7.60), and the corresponding figures in the prefectures of ‘Okinawa and Kochi. Even taking into account the differences in commodity prices, the feeling of injustice is undeniable.

The government has set a goal of raising the national average “to 1,000 yen or more as soon as possible.”

Last fiscal year, there was strong resistance to raising the minimum wage for small and medium-sized businesses, whose finances have suffered amid the coronavirus crisis.

However, due to a labor shortage and other factors, perceptions are changing. In a survey conducted by the Japan Chamber of Commerce and Industry, 41.7% of small and medium-sized enterprises responded that the minimum wage “should be increased”, a rise of 13.6% compared to the last year. This exceeded the percentage of people who answered that the minimum wage should be “lowered” or “maintained at the current level”.

However, the business performance of accommodation providers, restaurants and retailers, among others, is slow to recover. With the increase in raw material costs, the management of the company becomes more and more difficult.

The government must provide support so that companies can overcome these difficulties and increase wages. It is important to improve access to tax incentives for companies that raise wages and to encourage the strengthening of management structures.

The position of large companies is also being questioned. The government has worked to ensure that contractors can appropriately pass on increases in labor and material costs, passing them on to the delivery price. However, it is difficult to say that it produced sufficient results.

The Kishida administration has promoted “investment in people” as a pillar of its new capitalism strategy. The Prime Minister has the responsibility to raise the standard of living of workers and produce a virtuous economic cycle.

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