Japan – Preparing a record increase in the minimum wage

Japan wants to raise the minimum wage to a record level. This is to help low-income families struggling with inflation and the rising cost of living, according to a Bloomberg report.

According to Bloomberg, the Labor Ministry’s advisory committee aims to raise the country’s average minimum hourly wage by 31 yen, or 3.3%. Currently, the hourly wage is 930 yen (about $7 or about $33).

The increase will take place later this fiscal year. If completed, the agency said, it would be a record high in both the amount and the percentage since the government began using hourly wages as a standard in 2002.

Japan’s minimum wage and inflation

Prime Minister Fumio Kishida sees wage growth as the main driver of growth while striving for a more equitable distribution of wealth. lowest wages In Japan, it grew by at least 2%. Since 2013, with the exception of 2020, when the epidemic was at its peak.

“Raising the minimum wage is important to invest in people,” Deputy Chief Minister Seiji Kihara told reporters before the government commission’s decision. “I hope it will increase at a pace appropriate to the era of neo-capitalism,” he added.

“This will force companies to shift cost pressure to consumers, rather than saving in wages and lowering production costs,” commented Economist Takeshi Minami of the Norinchukin Research Institute. – I think it’s a good thing in a country like Japandemand-driven inflation remains weak. He added that the government is sending a message to companies.

Until now inflation Japan’s baseline remains above the Bank of Japan (BOJ) target of 2%, although the Bank of Japan expects rates to drop below that level by the next fiscal year.

In addition to the minimum wage, other indicators show that overall wage growth is still less than 3%. – Bloomberg reports.

According to Rengo, the largest union organization, about 4,900 trade unions in Japan have taken 2.07% of their jobs. Average monthly salary increase in this year’s wage negotiations.

However, most workers are not represented by trade unions in Japan, where the unionization rate in 2021 was 16.9%, according to the Ministry of Labor.

For all employees, overall earnings were just 1%. year-on-year higher in May, while real wages, adjusted for inflation, fell 1.8%. This means that inflation erodes people’s purchasing power, which can hurt consumption, Bloomberg explains.

Tsuyoshi Ueno, chief economist at the NLI Research Institute in Tokyo, said increases in the minimum wage help families, but also mean higher costs for businesses. He said that if companies fail to improve their productivity, it could lead to reduced part-time working hours and not necessarily positive economic growth.

Main image source: stock struggle

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