Lifting wage levels whets people's appetite to work and also boosts economic expansion by stimulating consumption. It is important to create an environment in which companies can afford to increase wages.
The Health, Labor and Welfare Ministry's Central Minimum Wages Council has decided on its target for an increase in the mandatory minimum wage for fiscal 2018. The council has settled on a proposal for minimum hourly wages to be lifted 26 yen to a national average of 874 yen. The increase topped the 25 yen proposed in fiscal 2017 and is the largest since fiscal 2002, when the current method for setting minimum hourly wages was adopted.
The rate of increase was 3 percent, achieving the government-advocated target of "about 3 percent annually" for three consecutive years. Although there were significant differences of opinion between labor and management representatives, the council eventually fell in line with the government's target.
The minimum wage is the lowest hourly remuneration companies must pay their employees. All workers can receive at least that amount, and the minimum wage is adjusted each year to reflect economic conditions.
Based on the latest yardstick, relevant councils in each prefecture will decide on their actual respective minimum wage increase after taking regional economic conditions into account. It is hoped the minimum wage increases will be steadily implemented.
Against a backdrop of robust corporate performance and the nation's shrinking workforce, there is a growing sense that Japan is facing a labor shortage. Companies are bumping up the hourly wages of part-time workers and other employees as they attempt to secure sufficient human resources. This is an environment suited to hefty increases in the minimum wage.
Adjust regional disparities
Japan's minimum wage is only about 40 percent of the national median, a low level among developed nations. It is one factor behind the lower wages offered for nonregular employment. The wage level of part-time workers is about 60 percent that of regular employees, less than the level of 70 percent to 80 percent in Europe.
The government has set a medium-term goal of the minimum hourly wage reaching 1,000 yen.
An increase in the minimum wage directly affects the livelihoods of people in nonregular employment or working at small and midsize companies. As a result of the increase in the minimum wage in the last fiscal year, 12 percent of workers at small enterprises received a pay raise. The ripple effects of this are not insignificant. This should lead to better wages for all workers.
If wages of part-time staff and other nonregular workers increase, there also will be expectations that more companies will offer them paths to becoming regular workers.
It is vital that greater support is provided to boost the profitability of midsize, small and very small businesses so they can sustain these wage increases.
Such support includes investment in facilities that boost productivity, encouraging expansion into growth fields, and improving the terms and conditions of deals between large companies and subcontractors. It also will be important to help midsize, small and tiny companies step up job training to develop employees' abilities.
Regional discrepancies in the minimum wage have been growing. The latest proposed increase would boost the minimum hourly wage by 27 yen in Tokyo and several prefectures, but by 23 yen in prefectures including Okinawa. The gap between the nation's highest minimum wage and the lowest will stretch to 225 yen.
Although this result reflects workers' cost of living and the wherewithal of companies to pay wages, an excessive disparity could become a factor in workers shying away from regional areas. How to strike a better balance in wages paid by different regions is an issue that needs addressing.
(From The Yomiuri Shimbun, July 26, 2018)
Read more from The Japan News at https://japannews.yomiuri.co.jp/
