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No.165(2014/8/7)
Standards for 2014 Regional Minimum Wages are raised by 16 yen in average

On July 29, the Central Minimum Wage Deliberative Council, an advisory body to the Minister of Health, Labor and Welfare, which is composed of six representatives of employers, workers and the public interest respectively, submitted a proposal for raising standards for 2014 regional hourly minimum wages. In proposing the standards, regions are classified into four ranks of A to D according to their economic activities. For the highest A rank, proposed standard for this year's increase is 19 yen per hour, then for the second highest B rank, 15yen per hour, for the third highest C rank, 14 yen per hour and for the lowest D rank, 13 yen per hour.

With reference to these standards, the Prefectural Minimum Wage Deliberative Council, which is set up in each of the 47 prefectures on a tripartite basis of 5 representatives of employers, workers and the public interest respectively decides concrete amount of raise around August, and the raise becomes commonly effective around October.If the prefectural level raises are decided in accordance with the proposed standards, the overall average minimum wage in Japan as a whole will be 780 yen per hour, a year-on-year increase of 16 yen.

The level of the minimum wage in Japan cannot be said to be sufficient for the life of the people, but if it is raised, it is expected to have a certain effect upon raising wages ofsuch workers like non-regular workers who are working in low wages. Moreover, the Minimum Wage Act stipulates that, in deciding minimum wage, it should not fall below the livelihood protection allowance(1), but actually in four prefectures the minimum wage falls below the livelihood protection allowance. It is expected that with the raise for this year, there will be no prefectures in which the minimum wage will fall below the livelihood protection allowance.

In the discussion in the Central Minimum Wage Deliberative Council this year, workers side emphasized that macro-economic growth should be reflected upon income increase and that wage hikes of organized workers and commodity price increases should be reflected upon minimum wage hikes. Moreover, workers side emphasized that it is necessary to discuss about the appropriate level of minimum wage, i.e. the level of livable wage. In particular, the workers side insisted to discuss about the levels of C rank and D rank in which minimum wages are set low and strongly opposed the standard proposal shown by the public interest members as unacceptable.

On the other hand, the employers side claimed that the minimum wages over the last five years, have had bigger influences upon business management than ever becauseminimum wage hikes had taken precedence over any relationship with productivity. They showed their dissatisfaction with the proposals presented by members of public interests, arguing that the minimum wage hikes which surpass the solvency of the small- and medium-sized enterprises will adversely affect employment and will endanger existence of the enterprises as well. Thus, workers and employers sides differed in their opinions from each other, but actually came to a settlement to submit the standards for the hikes shown by the members of the public interest to the Minister of Health, Labor and Welfare.

The raise of the minimum wages has gotten bigger in amount since 2007. At the background of the raise, there is a fact that the number of non-regular workers who cannot but work in low wages continues to increase, and with the increase, disparities continue to expand. With the hikes of minimum wages according to the proposals for the hikes, the rate of the workers who get lower wages than the minimum wage after the hike (effected rate (2)) continue to increase as well. The rate of such workers shared 1.6% in 2003, but after ten years, the rate expanded to 7.4% in 2013.

Note: (1)Livelihood protection allowance is a special allowance provided by the national government and/or the local government to the people who have been reduced to poverty due to diseases, injuries, old age, etc. in order to guarantee a lower limit of healthy and cultural life for them.
(2) The effected rate is based on the survey made for the workers who work in enterprises with a size of less than thirty workers.

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