Japan goverment panel to propose another record minimum-wage hike

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A Japanese government panel is expected to propose raising the average minimum wage for fiscal 2022 by a record 30 yen or more from 930 yen ($7) an hour, sources familiar with the plan said Monday, as the country battles accelerating inflation.

The focal point of discussion at the panel is how much the recent rise in inflation should be taken into account, with representatives from labor and management failing to reach an agreement at the previous round of discussions late July.

The labor side is calling for a big increase in minimum pay as the cost of living is rising while the management side, which is struggling with surging costs, has stressed the need for careful consideration.

The subcommittee of the labor ministry’s Central Minimum Wages Council met again later Monday to decide on the exact amount of increase.

Last year, the council proposed the minimum wage for all workers, including part-timers and contract workers, be raised by a record 28 yen to 930 yen.

Japan has seen wages grow but the pace of increase is seen as tepid. Meanwhile, Russia’s war in Ukraine since late February has sent energy, raw material and food prices rising globally and core consumer inflation in Japan has topped 2 percent in recent months, pressuring households.

Once the advisory panel sets a national target, local panels will decide on their minimum wage amounts, which will then be adopted around October.

Prime Minister Fumio Kishida is calling for more investment in people as he focuses on redistribution under his slogan of creating a “new capitalism.” The government is aiming to increase the minimum wage across the nation to 1,000 yen as soon as possible.

“We’d like to see an increase that would be appropriate for the era of a new capitalism,” Deputy Chief Cabinet Secretary Seiji Kihara said.

The government will accelerate efforts to create an environment for companies to raise the minimum wage through such steps as assisting small and mid-sized companies in restructuring and boosting productivity.

Japan’s minimum wage has been at low levels compared with other major economies, while there have also been gaps between urban and rural areas. In fiscal 2021, the highest minimum wage was 1,041 yen in Tokyo while the lowest was 820 yen in Kochi and Okinawa prefectures.

Weak wage growth is a major reason why the Bank of Japan sees the need to maintain its ultra low rate policy.

Despite the core consumer price index excluding volatile fresh food items exceeding its 2 percent target, the central bank views the rising price trend as temporary and more robust wage hikes are needed to achieve the long-elusive inflation target in a stable and sustainable fashion.

 

SOURCE: NEWS AGENCIES

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