A recent decision by a government advisory panel to recommend raising the nation's average legal minimum hourly wage by 3 percent this year — reportedly at the strong urging by Prime Minister Shinzo Abe — is a welcome move that should be continued. However, the proposed raise — though the highest since the government started discussing minimum wages under the current format in 2002 — alone would be far from enough to substantially improve the conditions of millions of people who work at or close to the minimum legal wage. It needs to be accompanied by other policy steps and labor practices, including encouraging more workers to be hired on regular full-time contracts, as well as support for small and medium-size companies so as to make sure that rising the minimum wages will not prompt them to reduce employment.

The recommendation by the Central Minimum Wages Council at the Health, Labor and Welfare Ministry will raise the national average of the minimum hourly wage, which are set in each prefecture, by ¥24 to ¥822. The discussion at the panel of experts comprising representatives from labor circles and business management is said to have been driven by Abe, who has spelled out a policy of raising the minimum wages by 3 percent annually to ¥1,000 within several years as part of efforts to fuel consumer spending and accelerate economic growth. The raise will indeed be higher than the average 2 percent hike among companies surveyed by Keidanren (Japan Business Federation) and the Japanese Trade Union Confederation (Rengo) in the annual wage negotiations this spring.

The changes in the minimum wages will affect many of the workers on irregular contracts, such as part-timers and temporary dispatch workers, and raising the level is all the more crucial for the economy since such people now account for 40 percent of the nation's employed workforce. The problem is, even with the steady increases in recent years, the minimum wage in Japan remains well below the levels guaranteed in many other advanced economies — so low that until a few years ago, people hired on the minimum wage in some prefectures were earning even less than what people on welfare were receiving in benefits.