Minimum Wage Hike Slows Down

Central Minimum Wages Council reached a deal on the average of minimum wage for workers in Japan in 2026 at 1,176 yen per hour, which rose by 55 yen (4.9 percent) from the previous year. Although the government of Japan has a target for minimum wage at 1,500 yen, the gain toward it gets smaller, reflecting recent slowdown of consumers price hike. It is likely that momentum for wage hike can be declining in Sanae Takaichi administration.

Every prefecture sets its own minimum wage in the fall, which indicates the lowest limit of hourly wage for an employee. A minimum wage is determined based on consideration of workers’ quality of life, average salary of ordinary people and solvency of companies. Central Minimum Wages Council decides a guideline for minimum wage hike in advance to local prefectural councils start discussion.

 

Last year, the central council presented 1,118 yen per hour for average of minimum wage, which marked 63 yen (6.0 percent) of increase from the previous year. This year, the council did not offer as high growth in minimum wage as it had done in 2025. While consumer price index (CPI) in June 2025 showed 3.3 percent of increase from the same month of the previous year, CPI in June 2026 rose by 1.7 percent. It might have affected minimum wage this year.

 

Despite his economic slogan to achieve “positive cycle” of economy with wage hike, former prime minister Shinzo Abe failed in turning around negative trend of real wage. His successors, Fumio Kishida and Shigeru Ishiba, worked hard for wage hike. Kishida caught a momentum for wage hike through spring labor negotiation. Ishiba set a target of achieving hourly 1,500 yen of minimum wage within 2020s.

 

It was Takaichi who slowed the trend down. Her policy named “crisis management investment” is not about investment for workers but for companies in seventeen criteria for some specific businesses including AI or semiconductor. In her administration’s Basic Policy on Economic and Fiscal Management and Reform (Thick-boned Plan) in 2026, the goal of 1,500 yen minimum wage was delayed to the first half of 2030s.

 

Minimum wage affects all the wages, because the employers hire employees based on the move of minimum wage. If a manager hopes to keep good workers with high productivity, he or she needs to raise salary of employees along with minimum wage hike. Wage hike can be a major political agenda at the time when voters are suffering from steep price inflation.

 

In the discussion of local councils starting in August, the managers are expected to restrain minimum wage hike, arguing price inflation of raw materials caused by depreciation of Japanese yen. Workers will demand higher wage hike than commodity price inflation. It is, anyway, a consequence of economic policy by previous administrations seeking 2.0 percent of “stable” inflation.

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