Japan's minimum hourly wage, which applies to all workers nationwide regardless of contract type, is set to be raised by 3 percent in fiscal 2018 -- the third consecutive year of increases. The minimum wage will go up by 26 yen, the largest single hike in history.
The government has set a goal of increasing the minimum wage to 1,000 yen. At the current pace of increases, it will likely top that amount in Tokyo as early as fiscal 2019.
Japan's worker shortage remains serious. The government has drawn up a plan to invite 10,000 nursing care workers from Vietnam. However, the minimum wage in South Korea is higher than that in Japan in real terms. Many cities in China have also drastically raised their minimum wages in recent years.
Since the aging of society has progressed in much of Asia, it would be difficult for Japan to solicit nursing care workers from overseas if the country's minimum wage was to be kept at the current level. Japan's international labor market competitiveness is insufficient.
Japan's minimum wage is only about 40 percent of the average wage of full-time employees, well below the approximately 60 percent in France and around 50 percent in Britain and Germany, and is among the lowest of OECD member countries.
A bill to reform the way people work, which was enacted during the regular Diet session that closed on July 22, set a cap on overtime to rectify many Japanese employees' long work hours. There are many non-regular employees who are paid just above the minimum wage, and some of them must hold down multiple jobs to make ends meet. To reduce long work hours for non-regular employees, it is indispensable to raise the minimum wage further.
A wide gap in the minimum wage between regions should also be addressed. Japan rates the 47 prefectures by four ranks from A to D based on their regional economic climate and other factors, while most other countries set a uniform nationwide minimum wage. Following the latest decision, the minimum wage in A-ranked Tokyo will reach 985 yen, but the amount in Okinawa and other prefectures in the D category will be 760 yen. The gap in the minimum wage between the highest- and lowest-ranked prefectures has rather widened from last fiscal year.
Gaps in workers' wages reflect differences in the scales of companies they work for as well as industry type and job category rather than regional economic conditions such as consumer prices.
If there is to be a 200 yen or more gap in hourly wages between regions for the same job category, for example, it would only encourage workers to move from areas with low minimum wages to regions with higher minimum wages.
According to a survey conducted by the Japanese Trade Union Confederation, commonly known as Rengo, average household income is gradually improving, but there are still many people who are concerned about their future livelihood. Under the circumstances, gradual increases in household income have not led to a recovery in consumer spending.
The government should further raise the minimum wage and narrow regional differences in pay levels. Broadening the sector of society paying taxes and social security premiums will help stabilize Japan's social security system.