This year’s spring wage negotiation achieved historical wage hikes. Some small and midsized firms raised wages to attract or retain workers or to respond to rising inflation, even though their earnings were insufficient to find pay raises. There are also companies that did not raise wages this time but are considering to do so in the future. This article covers government subsidies aimed to support such companies.
[1] Business improvements support subsidy
The subsidy for business improvements is provided to small- and medium-sized firms that have raised their lowest wage by at least 30 yen and also made equipment investments to cover a part of investment expenses. This program is applied when the difference between a company’s lowest wage and the region’s minimum wage was 50 yen or less. If the region’s minimum wage is 950 yen and a company’s lowest wage is 985 yen, the difference is less than 50 yen, making the company eligible.
If a company plans to raise wages in response to the announcement of regional minimum wages and apply for the subsidy, the pay raise must be done by the day before the renewed regional minimum wages take effect. From fiscal 2024, increase in the lowest wage in the workplace must be done only once in a year, rather than in multiple phases, to apply for the subsidy. Companies cannot submit application for a single workplace more than once a year.
The list below shows subsidy rates. There are upper limits according to the number of workers whose wages are increased and amounts of increase.
Table: Expense subsidy rates
|
Lowest wage in the workplace |
Subsidy rate |
|
Less than 900 yen |
9/10 |
|
900 yen or more and less than 950 yen |
4/5 (9/10) |
|
950 yen or more |
3/4 (4/5) |
* Numbers in ( ) are the rates for companies that have satisfied productivity requirements.
[2] Career development promotion subsidy
Companies that have revised their wage rules to increase fixed-term workers’ base salaries by at least 3% are applicable to the career development promotion subsidy’s “wage rule revision course.” Companies have to meet all of the following requirements;
1. Draw up and submit a career development promotion plan
Draw up a career development promotion plan and submit it to the prefecture’s labor bureau by the day before implementing the revised wage rules.
2. Description of wage rules
Describe rules on fixed-term workers’ base salary in the wage rules.
3. Pay increase
Revise the description in above 2 to increase fixed-term workers base salaries by at least 3% and pay wages based on the new rules for six months.
Companies that have raised wages by 3% or more and less than 5% are provided 50,000 yen per applicable worker, and those increased wages by 5% or more will be given 65,000 yen (43,000 yen in the case of large firms) per applicable worker. Companies may submit application for up to 100 workers in one fiscal year.
[3] Business restructuring subsidy
Subsidy for business restructuring includes five categories: Growth area entrance category (normal type), Growth area entrance category (GX type), Category to accelerate recovery from the coronavirus pandemic (normal type), Category to accelerate recovery from the coronavirus pandemic (minimum wage type), and Supply chain reinforcement category. In some categories, subsidy rates are raised for companies that made a large wage increase in a short period, or the ceiling of the subsidy rate is raised for companies making efforts to increase wages continuously and hire more workers.
Application for this subsidy is accepted in a designated period. Please check the latest information.
Other than the subsidies described above, there is also a tax credit program for companies that raised wages. Small and midsized firms can receive tax credits of up to 45% of the total amount of wage increase that was paid to all employees, while large companies may receive up to 35% of total wage increase. Please see below link for further details.
[Reference]
Labor Ministry, “Business improvements support subsidy”
Labor Ministry, “Career development promotion subsidy”
Economy and Industry Ministry, “Business restructuring subsidy”
Economy and Industry Ministry, “Tax credits for wage increase promotion”
*The information is based on laws and regulations as of the date of this article.
