Over 5% of small firm employees in Tokyo, Osaka paid below minimum wage: study

The ratio of small- and mid-sized business employees being paid below the minimum hourly wage set by the national government topped 5 percent in Tokyo and Osaka Prefecture in fiscal 2016, a sharp increase compared to data for fiscal 2012 to 2015, a Mainichi Shimbun study has shown.

The latest survey by the Mainichi underscored that while the average minimum wage in Japan has been increasing for the past 14 years, some firms are unable to keep up, resulting in underpaid workers in smaller businesses.

The Mainichi Shimbun acquired the data on wages between fiscal 2012 and 2016 by filing freedom-of-information requests with labor bureaus across the country and the Ministry of Health, Labor and Welfare.

The labor ministry surveys in June and July every year approximately 100,000 businesses across Japan with less than 30 employees, including part-time workers, about their employees' pay and calculates the percentage of those who are paid under the minimum wage. For some industries such as manufacturers, businesses with less than 100 workers are subject to the ministry survey. Construction and transportation firms are not covered in the research. The data is used as a reference for minimum wage revisions that are carried out every fall and is presented to the minimum wages council in each prefecture.

The highest percentage of small- and mid-sized business employees being paid below the minimum wage in fiscal 2016 was seen in Osaka Prefecture at 5.5 percent, followed by Tokyo at 5.3 percent. It was a 1.6 percentage point increase from the previous year for Osaka and a 3.9 point increase for Tokyo. Between fiscal 2012 and 2016, other prefectures that saw more than 5 percent of smaller firm employees being paid below the minimum wage were Hokkaido (fiscal 2012, 2013 and 2015), Okinawa (fiscal 2015) and Mie prefectures (fiscal 2015).

Other prefectures that witnessed high percentages of smaller firm employees being paid below the minimum wage in fiscal 2016 were Gifu at 3.5 percent, Hokkaido at 3.2 percent, Iwate at 3 percent and Okinawa at 2.9 percent, among other prefectures. Overall, the ratio for this fiscal year increased in 26 prefectures. The figure tends to rise as the size of the businesses becomes smaller. In Tokyo, the figure climbs to 7.7 percent if the subject is limited to workers at firms with less than 10 employees.

The increasing percentage of underpaid workers is believed to be partly attributable to the minimum wage hike. Since fiscal 2003, the average minimum wage has increased for 14 consecutive years, and the average hike amount across Japan was 12 yen per hour in fiscal 2012, 15 yen in fiscal 2013, 16 yen in fiscal 2014, 18 yen in fiscal 2015 and 25 yen in fiscal 2016. An increase of more than 10 yen per hour is seen every year since fiscal 2012.

According to a survey conducted by a job search services company, while average hourly pay for part-timers has been increasing to around 1,000 yen across the country, some employers are believed to hold down wages knowing the illegality of such an act or fail to check the minimum wage in their prefectures.

The national average of the minimum wage rose to 823 yen after this year's revision in October, topping the 800 yen mark for the first time. The national government is working to achieve a 1,000 yen per hour minimum wage.