The Central Minimum Wage Council’s subcommittee (an advisory body to the Minister of Health, Labour and Welfare) on the 24th summarized its guideline to raise the minimum wage (minimum wage) for 2024 to a nationwide weighted average of 1,054 yen per hour. This is an increase of 50 yen (5%) from the current average of 1,004 yen, surpassing the maximum increase of the current method seen in the 2023 fiscal year. (Kaori Hatama)
Minimum wage (minimum wage) refers to the minimum wage paid to all workers, including part-time and temporary workers. It is indicated in hourly terms based on the Minimum Wage Act and is revised annually. Companies and employers who employ workers for less than the minimum wage are subject to fines. Each prefecture’s council discusses based on the Central Council’s guidelines, after which labor bureau chiefs in each region decide on the amount of increase. The new minimum wage will take effect after October.
◆Management side “Consideration for small and medium enterprises”
The guidelines categorize prefectures into three groups, A-C, according to economic conditions. Group A includes Tokyo and five other prefectures, group B includes Tochigi and 28 prefectures, and group C includes Iwate and 13 prefectures. In the deliberations, the results showed an increase of 50 yen for all groups A, B, and C.
In the discussions, workers’ representatives argued for a significant increase, stating, “The lives of our peers, who are close to the minimum wage, are becoming increasingly difficult due to rising prices.” They demanded an increase of 67 yen from the current minimum wage, calling for half of the 23 prefectures nationwide to have their minimum wage exceed 1,000 yen, including 8 prefectures that have already surpassed that amount.
In response, representatives from management stated, “We must consider not placing an excessive burden on small and medium enterprises beyond their payment capabilities,” showing a cautious stance.
Since the 2016 fiscal year under the Abe administration, there has been an increase exceeding 3% almost every year regarding minimum wages. This is becoming increasingly important as it impacts wage increases for those working at levels close to the minimum wage. Prime Minister Fumio Kishida has indicated his intention to advance the goal of reaching 1,500 yen by the mid-2030s.
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◆In comparison to other countries, many companies still struggle to secure funds
If the minimum wage is raised according to the guidelines, the nationwide weighted average will be 1,054 yen per hour (a 5% increase from the previous fiscal year). However, this level remains low compared to advanced countries and is not sufficient to support living costs. The extent to which the ongoing discussions at local councils address the disparity between urban and rural areas will also be a concern.
Regarding the 2024 fiscal year’s guidelines, Hiroki Endo from the Hamagin Research Institute commented, “This increase is not defeated by rising prices. It surpasses the base-up for full-time regular employees in the spring labor negotiations, and the rate of increase is reasonable from the perspective of narrowing the gap between regular and non-regular employment.”
However, according to the Cabinet Office, in 2022 the ratio of the minimum wage to the median wage of full-time workers was 45.6% in Japan, compared to 52.6% to 60.9% in various European countries and South Korea.
“It is impossible to live decently on the minimum wage. Even working full-time, it is uncertain if one can earn 2 million yen annually. At this level, it only creates working poor.” Koichi Kurosawa, Secretary-General of the National Confederation of Trade Unions, which is not participating as a committee member in the council, raised his voice in front of the Ministry of Health, Labour and Welfare on the 23rd, along with about 30 union members, calling for a minimum wage of over 1,500 yen.
Ministry of Health, Labour and Welfare
The future of continuous increases still remains uncertain. During the discussions regarding the guidelines, representatives from management argued that many enterprises are unable to pass on costs related to personnel and soaring material prices, stating, “It is a difficult situation to secure the funds for (minimum wage increase).” They called for the stabilization of the payment capability of small and medium enterprises and support measures.
On the other hand, the labor representatives emphasized the issue of regional disparities. They pointed out that labor is flowing out from regions with low minimum wages to urban areas with higher wages, highlighting the need to uplift rural areas and reduce disparities.
In the 2023 fiscal year, numerous proposals exceeding the central council’s guidelines emerged in discussions at various local councils. For instance, Saga Prefecture increased the minimum wage by 8 yen, with 24 prefectures raising it above the guideline. In the 2024 fiscal year, attention will be on whether local councils will again produce proposals exceeding the guideline.