Discussion on Japan's Minimum Wage Increase by '1000 Yen+'... Even with the Largest Raise, Still Lower than Korea

Largest Increase in 2 Years... Key to Surpassing 1000 Yen
South Korea Led Japan Last Year, Expected to Remain High This Year

The Japanese government has begun discussions with the goal of setting the minimum wage at "1,000 yen or more."

According to the Nihon Keizai Shimbun (Nikkei) on the 1st, the Central Minimum Wage Council, an advisory body of the Ministry of Health, Labour and Welfare, held its first meeting the day before to discuss raising the minimum wage. The Central Council will present regional increase standards later this month, and then the minimum wage will be decided by each metropolitan government. The new minimum wage is planned to be applied from October this year.

[Image source=Reuters Yonhap News]

The Japanese government previously set a target for this year of a nationwide average hourly wage of 1,000 yen (approximately 9,140 won) or more. Prime Minister Fumio Kishida is actively calling for an increase in the minimum wage under the banner of "realizing a stable virtuous cycle between prices and wages." At a press conference on the 13th of last month, he stated, "I hope discussions will be held to achieve a minimum wage of 1,000 yen per hour this year."

In Japan, the minimum wage varies by region depending on price levels and other factors. The highest is Tokyo at 1,072 yen, and the lowest are Okinawa and Kochi Prefecture at 853 yen, a difference of 219 yen. Because of this, the term "national average minimum wage" is used, which is currently calculated at 961 yen (approximately 8,780 won).

To meet the "1,000 yen" mentioned by Prime Minister Fumio, an increase of more than 4.1% (39 yen), the largest increase ever, is required. Japan has raised the minimum wage by the largest margin in two consecutive years recently, with 28 yen in 2021 and 31 yen in 2022.

Japan's recent consumer price inflation rate is in the 3% range. The consumer price index (excluding fresh food) in May rose 3.2% compared to the same month last year. Although this is 0.2 percentage points lower than the inflation rate in April, it remains generally high. Due to the sharp rise in international energy prices and the depreciation of the yen (yen depreciation phenomenon), the rate rose to the 3% range in September last year and surged to 4.2% in January this year.

Accordingly, companies are also actively raising wages. According to Keidanren (Japan Business Federation), the wage increase rate for large companies in this year's spring wage negotiations, known as "Chunto" (春?), was 3.91%, the highest in 30 years.

South Korea's Minimum Wage Surpasses Japan's Last Year... Impact of Yen Depreciation

[Image source=Yonhap News]

Meanwhile, South Korea's minimum wage surpassed Japan's last year. South Korea's minimum wage was set at 9,160 won, a 5% increase compared to the previous year, which is higher than Japan's minimum wage increase. This reversal was further influenced by the yen depreciation phenomenon.

Earlier, at the full meeting of the South Korean Minimum Wage Commission, worker representatives advocating for labor demanded an hourly wage of 12,210 won for next year, a 26.9% increase from this year. Employer representatives advocating for management proposed the same hourly wage as this year, 9,620 won.

However, despite nine full meetings, the gap between labor and management positions has not narrowed, and the legal deliberation deadline was missed on the 29th of last month. The Minimum Wage Commission plans to hold its 10th full meeting on the 4th to continue discussions.

This content was produced with the assistance of AI translation services.