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Japan's average minimum wage should stay the same amid virus resurgence: panel

The Central Government Building No. 5 that houses the Health, Labor and Welfare Ministry is seen in this file photo. (Mainichi)

TOKYO -- Japan's average minimum hourly wage should be maintained at the current level, a subcommittee of the government's Central Minimum Wage Council decided on July 22, in a rare move amid the economic downturn due to the novel coronavirus pandemic.

The subcommittee of the panel to the labor minister drew up a report showing no benchmark for a hike in regional minimum hourly wages for fiscal 2020 in consideration of the pandemic-hit economy. "It is appropriate to maintain the current level," the report said.

It is the first time for the subcommittee not to indicate a standard hike amount -- based on which prefectural minimum wages are decided -- since fiscal 2009 in the wake of the global financial crisis triggered by the collapse of U.S. investment bank Lehman Brothers. While minimum wages have been raised substantially over the past several years, it has become effectively difficult to see such raises this fiscal year.

When discussing a hike in the minimum wage during the subcommittee meeting, management representatives demanded a wage freeze amid the sluggish economy due to the coronavirus crisis, with one of them saying, "The economic indices at present show the worst situation ever." Meanwhile, labor representatives called for a wage hike on the grounds that "it is imperative to stimulate domestic demand for economic recovery."

The subcommittee meetings, which began on July 20, continued on and off and overnight until July 22. However, the gulf between labor and management was so huge that they ended up finding no common ground.

Management representatives argued that the government's state of emergency declaration over the novel coronavirus and requests for businesses to shut down temporarily to curb the spread of the virus specifically brought "a significant loss in demand." They insisted that a wage hike would "drive small- and mid-scale companies and smaller businesses further into predicament."

Labor representatives, meanwhile, claimed that forgoing a minimum wage hike "would increase social insecurity and is tantamount to approving an economic gap" amidst the resurgence of coronavirus infections.

In the end, experts representing public interest suggested factors including that the recent surge in the number of new infections following the lifting of the state of emergency "requires caution for its effects on the economy and employment" and concluded that "it is difficult to indicate a benchmark amount and maintaining the current levels is appropriate."

The panel's conclusion comes in compliance with the government's policy to give top priority to "protecting employment now with overall efforts across the public and private sectors." The subcommittee filed a report on the outcome of the meetings to the labor minister on July 22.

In response to the report, the local minimum wage councils at prefectural labor bureaus will decide whether to raise their regional minimum wages and the amount of such hikes if they do.

According to the Ministry of Health, Labor and Welfare, the Central Minimum Wage Council also stopped short of indicating a standard hike amount in the annual minimum wage review in fiscal 2002 and 2004, when the nation's economy was still reeling from the burst of an IT economic bubble and other downturns.

However, following discussions at regional minimum wage councils, 17 prefectures raised their minimum wage by 1 yen in fiscal 2002 and 44 prefectures including Tokyo, Hokkaido, Kyoto and Osaka boosted their lowest wage by 1 to 2 yen in fiscal 2004.

The new minimum wage for fiscal 2020 is expected to be applied from October.

(Japanese original by Hidenori Yazawa, Lifestyle and Medical News Department)

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