The latest guideline on the government's economic and fiscal policy calls for "more quickly" raising legal minimum hourly wages to ¥1,000 on a nationwide average, compared with ¥874 today. Apparently in view of concerns over the impact of higher manpower expenses on the management of small and medium-size companies, however, it fell short of specifying a time frame for achieving the ¥1,000 level.
Japan's legal minimum wages, the pay below which will subject the employer to punishment and determined by each prefecture, remain well below the levels in many other major advanced economies. In 2015, Prime Minister Shinzo Abe announced that his administration will seek to raise the average minimum wage by 3 percent annually to push it up to ¥1,000 an hour.
The minimum wages have in fact been increased by more than 3 percent year-on-year from 2016 to 2018, and are estimated to reach ¥1,000 in 2023 if the current pace of raise continues. While concern lingers over the possible damage from higher minimum wages, particularly on smaller firms in rural parts of the country, the government needs to push for accelerating the raise in minimum wages by taking steps to help businesses overcome its potential downside.
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