The Central Minimum Wage Council of the Health, Labor and Welfare Ministry has failed to set a target for an increase in minimum wages, due to the wide gap between labor and management. The current level will basically be maintained.
This is the first time since fiscal 2009, following the collapse of Lehman Brothers, that minimum wages have come to a standstill. Given the serious economic downturn caused by the outbreak of the novel coronavirus, it is inevitable that priority be given to securing jobs. It is important to create an environment in which wage increases are possible.
Following the discussion at the central council, the minimum wage for each prefecture will be examined by local minimum wage councils and revised from the autumn on. Each local council should carefully analyze the economic situation in its area and make appropriate decisions.
Minimum wages are also applied to non-regular workers such as part-timers. Raising the wages of workers as a whole will strengthen the foundation of their lives and revitalize the economy by stimulating consumption. In that sense, it is fundamentally desirable to raise the wage in a stable manner.
In 2015, the government set a goal of raising hourly wages by about 3% every year to a national average of 1,000 yen. Up through last fiscal year, such wages increased by about 3% for four consecutive years, and currently the national average is 901 yen.
At this fiscal year's central council meeting, the labor side demanded that hourly wages be raised as in previous years, while the management side insisted they should be frozen. The hotel and restaurant industries have been hit hard by the coronavirus pandemic, and if they are forced to increase wages, they say they could be forced to cut some employees.
While prioritizing job security first, it is important to return to the track of raising wages from next fiscal year onward. It is reasonable to firmly maintain the target of a national average of 1,000 yen.
It is also essential to narrow regional differences regarding the minimum wage.
The highest minimum wage is 1,013 yen in Tokyo, while some other prefectures, such as Aomori, remain at 790 yen. If the disparities are left unaddressed, there are concerns that young people will leave rural areas in search of higher wages and move to urban areas. Raising wages outside of urban areas is important partly to rectify the concentration of people in Tokyo.
Even in the face of the pandemic, some companies have likely improved their performance, depending on the region or industry. If the postponement of wage hikes is taken for granted, that would lower the vitality of the economy. The issue must be examined vigorously.
Minimum wages in Japan are low compared to those in other major industrialized countries, which is one of the reasons for sluggish consumption. The government is encouraged to help strengthen the profitability of small and midsize enterprises. It should help those companies invest in capital equipment so they can expand into growth areas and assist them in improving terms of trade with large corporations.
The prolonged pandemic has reaffirmed the importance of jobs that are essential to social activity, such as medical services, nursing care, childcare and distribution. Even if it is difficult to immediately raise wages to a significant degree, improving the treatment of those workers is an issue to be tackled by society as a whole.
-- The original Japanese article appeared in The Yomiuri Shimbun on July 26, 2020.
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