Government Advisor Group Recommends Record-Breaking Minimum Wage Hike for Second Year, Sending Positive Signal to Japan's Central Bank
A government advisory group has urged a record-breaking minimum wage hike for the second year in a row, sending a positive signal to Japan's central bank seeking growth-oriented economic development.
The advisory group, composed of labor representatives, business leaders, and experts from the Ministry of Health, Labor and Welfare, on Monday recommended increasing the average monthly minimum wage by 63 Japanese yen (0.43 USD) to 1,118 Japanese yen, representing a 6% hike. This is the largest increase since the government set a target for wages in 1978, surpassing last year's record of 5%.
To achieve consensus, the group held seven meetings comprising labor representatives, business leaders, and experts. This is the longest negotiation period in over 40 years, highlighting the challenge of balancing large-scale wage hikes with protecting corporate profit margins amidst rising living costs and threats from US tariffs.
This target suggests that wage growth remains robust, which is a reassuring signal for Japan's central bank as it seeks evidence of strong economic growth to further normalize monetary policy. Although nominal wages have grown strongly in recent years, actual wages have largely remained negative, with inflation continuing to outpace income growth.
It is expected that data released on Wednesday will show a 0.7% decline in actual wages compared to the previous year, marking the sixth consecutive month of decline.
Under this new target, prefectures are expected to set their own targets, with decisions likely to be made by the end of the month.