Higher Minimum Wages Implemented in Japan Once More
The Japanese government has proposed a significant increase in the national minimum wage for fiscal year 2025, marking a 6.0% rise and the largest single-year increase on record. The new minimum wage is set to raise the average hourly wage from ¥1,055 to ¥1,118 ($7.14 to $7.57 USD).
Historical Context
This increase is the largest ever since the current minimum wage system was introduced 23 years ago. It marks the fifth consecutive year of record-breaking minimum wage increases in Japan. Last year, the average minimum wage was raised by 50 yen, or about 5.0%, to reach ¥1,055.
Addressing Stagnant Wage Growth
The consistent rise in the minimum wage aims to address stagnant and negative real wage growth experienced recently, as real wages had been contracting for months despite nominal increases. This increase is part of efforts to overcome stagnant wage growth amid inflation and support workers, especially in small and medium-sized enterprises, which find it challenging to manage wage hikes.
Geographical Distribution
In Japan's three major metropolitan areas, the new minimum wage will exceed ¥1,100 in prefectures such as Saitama, Chiba, Aichi, Osaka, Kyoto, and Hyōgo. The new minimum wage will be around ¥1,000 to ¥1,050 in a number of prefectures, mainly in Tōhoku, Kyūshū, and Shikoku. Notably, this increase ensures that all 47 prefectures will have minimum wages above ¥1,000 per hour for the first time.
Categorisation of Prefectures
The subcommittee divided prefectures into three categories based on economic conditions. Category A prefectures (Tokyo and Osaka) and Category B prefectures (Hokkaidō, Hiroshima, and Fukuoka) will see a ¥63 increase, while Category C prefectures (Akita and Okinawa) will see a ¥64 increase.
Future Targets
The government has set a target of raising the national average minimum wage to ¥1,500 during the 2020s, requiring an annual hike of 7.3%. Prime Minister Ishiba Shigeru has expressed a desire to offer targeted assistance to employers when the minimum wage exceeds the government's target level.
[1] Ministry of Health, Labor, and Welfare
[2] The Asahi Shimbun
[3] Nikkei Asia
[4] The Japan Times
[5] Kyodo News
- In an effort to support workers and small and medium-sized businesses, Prime Minister Ishiba Shigeru aims to assist employers with photo documentation, such as invoices or payroll slips, to demonstrate compliance with the increasing minimum wage.
- As part of their financial commitment towards business growth and worker welfare, the Ministry of Health, Labor, and Welfare has proposed releasing a series of educational resources, including photos and videos, to help employers effectively manage wage hikes in line with the new minimum wage standards.
