Tokyo behind jump in minimum wage
TOKYO: The steep hike in the minimum hourly wage proposed by a labour ministry panel on Wednesday was encouraged by the government, which hopes to ensure the nation’s economic recovery by heightening people’s salaries.
A sub-committee of the Central Minimum Wages Council, an advisory panel to the Health, Labour and Welfare Ministry, last Wednesday recommended raising the hourly minimum by a national average of 18 yen (14 cents) in fiscal 2015, the largest hike since fiscal 2002.
Companies are expected to move quickly to respond to the increase, as higher labour costs can weigh on their operations.
Although the average pay hike was set during this year’s shunto spring labour-management wage talks mainly for major companies, the overall recovery in consumption has been slow. The government wants to create a virtuous circle of economic growth by raising the minimum wage to improve the consumption environment.
The discussions in the sub-committee suddenly ran in one direction, to implement a record increase in the minimum wage. Senior official at the Council on Economic and Fiscal Policy
The sub-committee initially began deliberations on raising the minimum hourly pay by ¥6 to ¥8. However, on July 23, the day before the panel’s deliberations were scheduled to end, Prime Minister Shinzo Abe instructed Cabinet ministers at the Council on Economic and Fiscal Policy meeting to make efforts to improve pay scales by a large margin.
“The discussions in the subcommittee suddenly ran in one direction, to implement a record increase in the minimum wage,” a senior official of the ministry said. The national average of the minimum wage will be raised by 2.3 per cent.
Companies have had mixed reactions to the increase.
Many part-time workers’ hourly wage is around the minimum wage in local areas, so the increase will push up labour costs. “Consumers have become sensitive to prices since the raise of consumption tax. So to the greatest extent possible, we don’t want to pass the jump in personnel costs on to product prices,” a senior official at a convenience store in Hokkaido said.
Urban areas are troubled by a serious labour shortage.
“The hike in the minimum wage will improve people’s lives,” said Hisashi Yamada, a senior economist of the Japan Research Institute. “However, this will affect small and midsized companies, as they will be urged to improve profitability, which will make it difficult for them to retain staff. (The government) needs to formulate a policy to support small and midsized companies.” — WP-Bloomberg