Record High in Minimum Wage Hike

The National Council for Minimum Wage submitted a guideline that minimum wage in Japan in 2025 would be 1,118 yen per hour, 63 yen higher than last year. It marked a record hike, with 6.0 percent of growth, in the history of the council. It reflected the policy of Shigeru Ishiba administration to support workers more than employers, succeeding basic policy from his predecessor, Fumio Kishida.

Ministry of Health, Labour and Welfare has national and prefectural councils for minimum wage, which are set for negotiation between employers and workers with mediation of public experts such as professors or media leaders. The national council determines a guideline for prefectural councils every year. The prefectural council decides minimum wage in their region with consideration of guideline offered by the national council. New minimum wage is applied to each prefecture normally on October 1st. An employer cannot hire any workers with a wage lower than determined minimum wage.

 

In the time of Shinzo Abe administration, which promoted management of companies for his economic agenda called Abenomics, minimum wage showed slow progress, reflecting preference of employers who did not like to spend their profit for workers. It was Fumio Kishida who started caring workers with his own agenda called Reiwa Version of Doubling Income. Minimum wage hike in 2024 marked unprecedented rise by 50 yen under the leadership of Kishida..

 

The guideline of national council decided on August 4th overrode the result in 2024. It suggested that six urban prefectures (Rank A) and other twenty-eight prefectures (Rank B) should raise the minimum wage by 63 yen per hour, while thirteen rural prefectures (Rank C) were advised to have 64 yen of hike. Receiving that guidance, regional minimum wage councils will start their discussion to introduce new minimum wage.

 

Ishiba administration upholds a target to have at least 1,500 yen per hour for average minimum wage in Japan. To reach this goal, the minimum wage needs to rise by 7.3 percent every year. The record high growth of 63 yen this year still in short of the necessary growth. Real wage in June marked 1.3 percent of decline from the same month in the previous year, continuing that negative trend for six consecutive months. Expecting rise of minimum wage to contribute to cover price inflation, Ishiba administration welcomes current trend of large hike in minimum wage. 

 

Although rise of minimum wage works for rise of workers’ wage as a whole, it is not easy for small and mid-size entrepreneurs to reflect that wage hike. Non-regular workers are less likely to receive benefit from rise of minimum wage, because they are most vulnerable to price inflation. The fundamental question for Ishiba administration is how to support those workers with policies.

 

Distribution of benefits to low-income families and families with child did not attract public attendance in campaign for the Upper House election in July. In spite of efforts to provide market with more rice, the price of rice still remains in a high level. Ishiba administration still struggles to change the course of economic policy from protecting major business leaning on employers to more focusing on every worker.

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