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No.138(2013/10/9)
With Cut in Livelihood Protection Allowance, Minimum Wage Is Getting
Considerably More Important

On August 5 the Central Minimum Wage Deliberative Council, an advisory body to the Minister of Health, Labor and Welfare, submitted a proposal for the standards for prefectural minimum wage hikes in fiscal 2013. If prefectural hikes are implemented in accordance with these proposed standards, the overall average wage in Japan as a whole will be 763 yen per hour, a year-on-year increase of 14 yen.

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.

In proposing the standards for the prefectural minimum wage hikes, regions or prefectures are classified into four ranks of A to D according to their economic activities. For the highest A rank, the proposed standard for this year's increase is 19 yen per hour, then for the second highest B rank, it is 12 yen per hour, and for the third highest C rank and for the lowest D rank, it is 10 yen per hour. The proposed standards for minimum wage hikes cannot be said to be sufficient for the livelihood of people, but, if they are realized, it is hoped that they will have a certain effect on the raise of the wages of such working people like low wage earners including non-regular workers.

Moreover, it is stipulated in the Minimum Wage Act that the level of minimum wages should be decided, taking note of livelihood protection measures, and that the minimum wages should not be less than livelihood protection allowance. Even after the revision of minimum wages according to the proposals this time, however, there still remains a region, namely Hokkaido region, where minimum wage will be lower than livelihood protection allowance. The livelihood protection system is a system in which the national government and local governments provide livelihood protection assistance allowance to the people who have sunk into dire poverty economically, in order to secure their minimal healthy and cultural life.

While the so-called reverse phenomenon by which the livelihood protection allowance level surpasses the minimum wage level is not yet resolved, the government has decided to decrease livelihood protection allowance from August this year. The decrease is expected to be done at three stages from August this year to April in 2015. If all decreases are finalized, reduction of 6.5% will be realized in budget basis.

In reducing the livelihood protection allowance at the final stage, the reduction will be different from family to family and from region to region. According to the tentative calculation by the Ministry of Health, Labor and Welfare, the reduction will be from 0 % to 7% level. For those couples in the sixty years of age or more who live in towns or villages, the reduction will be 0% but even those couples in the sixties who live in cities, the reduction will be 3.8%. The largest reduction will be for those families of a couple with one child who live in cities and the reduction will be 7.3%. In the case of a family of one couple with two children who live in cities, the reduction will be 7.1%.

The reduction of livelihood protection allowance will be larger in the metropolitan areas and it is indeed in the prefectures with big cities in which minimum wage is lower than livelihood protection allowance. This fact could have an influence upon the future deliberation of minimum wages. However, while the Japanese economy seems to be getting better, on the contrary, non-regular workers are increasing, expansion of disparities have not yet been checked and poverty issue is getting serious. From that point of view, the role of minimum wage is increasing its importance. The necessity for enabling working people to lead a life without anxiety by raising their overall wages through raising minimum wages is getting considerably higher.

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