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No.99(2012/8/10)
FY 2012 Minimum Wage Hike Standards

On July 26 the Central Minimum Wage Deliberative Council, an advisory body to the minister of health, labour and welfare, submitted a report on the standards for prefectural minimum wage hikes in fiscal 2012. If prefectural hikes are implemented in accordance with these standards, the overall average minimum wage in Japan as a whole will be 774 yen per hour, a year-on-year increase of 7 yen. The final decision on prefectural minimum wages is made by tripartite Prefectural Minimum Wage Deliberative Councils, however, and further increases can be expected depending on deliberations in these councils.

The current minimum wage is 873 yen/hour in Metropolitan Tokyo, the highest in Japan, followed by 836 yen/hour in Kanagawa Prefecture and 786 yen/hour in Osaka Prefecture. The lowest minimum wage is 645 yen/hour in Okinawa, Kochi, and Iwate Prefectures. The highest range of the proposed standards for this year's increase is from 10-20 yen/hour in Metropolitan Tokyo; the lowest is 4 yen/hour in 34 prefectures, including Iwate Prefecture.

In the Japanese minimum wage system, the national government decides the minimum wage limits in compliance with the Minimum Wage Act enacted in 1959, and employers are obliged to pay wages higher than these minimum wages. Every year from June to July, the Central Minimum Wage Deliberative Council, consisting of representatives of workers, employers, and the public interest, discusses and decides the standards for prefectural minimum wage hikes. With reference to these standards, the Prefectural Minimum Wage Deliberative Councils, which are set up in each prefecture on a tripartite basis, decide concrete amounts around August, and the increase becomes commonly effective around October.

There are two kinds of minimum wage: one is the minimum wage by region or prefecture, and the other is the minimum wage by industry.

The minimum wage by region or prefecture is applied to all workers, including part-time workers, temporary workers, and other atypical workers, employed in any workplace in that prefecture, regardless of industry or job; it is determined by each of Japan's 47 prefectures.

The minimum wage by industry is related to specific industries in the region or prefecture. On the initiative of labour unions and employers concerned, it is set in those industries in which it is recognized that a minimum wage higher than the regional level is necessary. As of February 1, 2011, 250 minimum wages by industry had been determined nationwide.

The minimum wage covers the monthly basic wage but does not include extra wages, such as overtime pay, holiday work pay, non-absence allowance, commuting allowance, family allowance, or other allowance.

Concerning the minimum wage, the government, workers, and employers reached agreement in the employment strategy dialogue in 2010 that "an hourly wage of 800 yen be realized throughout Japan as soon as possible and a national average of 1,000 yen per hour be aimed for by the year 2020."

In response to the government's decision on minimum wage hike standards for 2012, RENGO (Japanese Trade Union Confederation) General Secretary Hiroyuki Nagumo stated that the proposal can be welcomed as it paves the way toward (1) raising the lowest level of wages, (2) achieving the agreement reached in the 2010 employment strategy dialogue, and (3) quickly resolving the so-called reverse phenomenon by which the livelihood protection level surpasses the minimum wage level, which RENGO has repeatedly advocated amid Japan's severe economic climate. General Secretary Nagumo also emphasized that RENGO will continue to conduct activities aimed at raising the minimum wage to a level that places importance on living costs and wage levels in each region.

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