Minimum Wage Hike Shows Slower Growth

The average of minimum wage in Japan in 2026 was settled at 1,177 yen per hour, increasing by 56 yen from the previous year. While it marked the second largest hike, following 66 yen of the plus in 2025, the result in negotiation in 2026 showed a possibility that the trend of large increase has peaked out. It partly reflects political stance of Prime Minister Sanae Takaichi, who stands closer to the mangers than workers. 

Minimum wage is set for each company to guarantee its workers minimum hourly payment. This benchmark works to raise workers’ wages in every workplace, because every company hopes to obtain better workforce than others by raising payment for their work. If minimum wage of a company increases, other companies also need to distinguish themselves with higher wage than the lowest payment which is catching up with them.

 

The minimum wage is decided in every prefecture. Each prefecture is categorized in one of three groups from A to C. Six urban prefectures including Tokyo and Osaka consist of A group, twenty-eight prefectures do B and thirteen rural prefectures are in group C. The Central Minimum Wages Council in July decided its guideline to raise minimum wage by 54 yen for group A and 56 yen for group B and C.

 

According to that guideline, local councils in each prefecture discussed their minimum wage of this year. Resultingly, the prefecture with highest minimum wage is Tokyo with 1,280 yen for an hour, with 54 yen (4.4 percent) of increase. The lowest minimum wage is 1,085 yen of Miyazaki (group C) with 62 yen (6.0 percent) of increase.

 

Some prefectures in group C added some premium on July guideline to catch up with group A and B. Saga increased by 65 yen, adding 9 yen to 56 yen of guideline, and Kagoshima added 8 yen to the guideline. There is a competition of minimum wage hike between prefectures to keep workers in their prefecture. On the other hand, excessive minimum wage hike affects company’s capability of payment. Small or mid-size companies tend to be weak for paying high salaries.

 

However, there appeared some elements of slowdown. The guideline drawn in July showed 4.9 percent of increase from the previous year. But the guideline set in 2025 was 6.0 percent of increase. It was the first example in these six years for the minimum wage hike rate to show decline from the previous year. Although price of rice significantly rose in 2025, the price inflation has not been gotten rid of in 2026.

 

Former prime minister Shigeru Ishiba set a target to raise average minimum wage to 1,500 yen within 2020s. But Takaichi postponed that target to “the earliest time in the first half of 2030s.” It reflects conservative tendency of policy to encourage big companies and their managers, making a contrast to liberals which focus on workers.

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