The government has set the goal of increasing Japan’s minimum wage to 1,500 yen by mid-2030s. Since this year’s spring wage talks have achieved a historical hike, a major increase is also expected in minimum wages this year. The Labor Ministry’s Central Minimum Wage Council has recently disclosed a guideline for regional minimum wages of FY2024.
[1] Guideline for FY2024 regional minimum wages
In providing minimum wage guideline, prefectures are classified into three ranks from A (6 prefectures), B (28 prefectures) and C (13 prefectures) and a target level is set for each rank to give proposals. This year, the target level of minimum wage increase was 50 yen for all of the three ranks.
If all the prefectures raised minimum wages according to the proposal, the weighted nationwide average minimum wage will increase by 50 yen to 1,054 yen, the largest since the guideline system began in 1978 (43 yen last year). That will amount to a 5.0% rise (4.5% last year) and almost equivalent to the pay hike rate achieved in this year’s spring wage talks.
[2] Process of setting minimum wages
After the Central Council makes the proposal, regional minimum wage councils study the status in the prefectures and have discussions. After receiving opinions and objections, the directors of prefectural labor bureaus make the final decision.
While regional minimum wages will be determined after the above process, deliberations are highly likely to result in major increases this year. Since the government also aims to reduce wage gaps between urban areas and local regions, it is possible that some prefectures will implement increases that exceed the proposed levels. Since revised minimum wages will be applied from October, companies should watch the development and ensure their employees’ wages are above the standard.
[Reference]
Guideline for revising FY2024 regional minimum wages
https://www.mhlw.go.jp/stf/newpage_41785.html
The Cabinet Office, “the Grand Design and Action Plan for a New Form of Capitalism (2024 revised version)”
https://www.cas.go.jp/jp/seisaku/atarashii_sihonsyugi/pdf/ap2024.pdf
*The information is valid as of the date of this article.
