Council begins discussion of rough guidelines for minimum wage in Japan

The Central Minimum Wage Council of the Ministry of Health, Labour and Welfare (an advisory body to the Minister of Health, Labour and Welfare) began discussions on raising the minimum wage for fiscal 2023. To achieve the government’s target of a “nationwide average of 1000 yen,” an increase of over 4% for the first time is deemed necessary. With the continued rise in prices, there is growing momentum for companies to raise wages. It is expected that the discussions will proceed with the goal of reaching a significant milestone.
In late July, the Council is expected to provide guidelines for region-specific wage increases. Based on these guidelines, each prefecture will determine its minimum wage, and the new wage standards will generally take effect from October. The current minimum wage stands at 961 yen. During the revision for fiscal 2022, it was raised by 31 yen from the previous year, marking a 3.3% increase. Although this increase was the largest ever at the time, achieving 1000 yen for fiscal 2023 would require an additional increase of 39 yen or more, which amounts to over 4%.
The amount of increase will be presented for each prefecture after these are ranked into categories. Currently, there is a difference of over 200 yen between the highest (Tokyo at 1072 yen) and the lowest (such as Okinawa at 853 yen) prefectures. To help close the wage gap between urban and rural areas, rankings will be consolidated into three categories: A, B, and C.
Even if Japan achieves an hourly wage of 1000 yen, disparities with other countries will remain. As of January 2022, the UK’s minimum wage was equivalent to 1400 yen, while France’s was 1385 yen. In the US, the minimum wage varies by state, with the state of Washington exceeding 2000 yen as of January 2023.

Labour Force Survey Monthly Results¹

(1) Employment

The number of employed persons in May 2023 was 67.45 million, an increase of 150,000 over the same month the previous year, surpassing the pre-pandemic level for the same month in 2019. By gender, this included 36.97 million men, down 70,000, and 30.47 million women, up 220,000 from the previous year, respectively.

(2) Unemployment

The number of unemployed persons in May 2023 was 1.88 million, a decrease of 30,000 from the same month in the previous year.

The seasonally adjusted unemployment rate in May was 2.6%, unchanged from the previous month. The unemployment rate for men was 2.7% and 2.4% for women, both unchanged from the previous month.

Units: 10,000 persons

(3) Job Availability

Japan’s job availability in May stood at 1.31, down 0.01 from the previous month. This ratio means there were 131 job openings for every 100 job seekers. The ratio of regular employee job offers to applicants was 1.03, unchanged from the previous month.
The ratio of new job offers to applicants, a leading indicator for the labour market, was 2.36, up 0.13 over the previous month. Among various industries, accommodation and restaurant services saw the sharpest rise at 13.5%, followed by the education and learning support sectors at 12.0%. In contrast, employment offers in the construction sector dropped 0.8%, while thosein the manufacturing sector sank 5.4%.

Industrial Production²

Industrial output in May fell 1.6% from the previous month. While production and shipments decreased, inventory ratio and inventories increased.
The industries that mainly contributed to this decrease were as follows: (1) motor vehicles; (2) electrical machinery and information/communications electronics; and (3) inorganic and organic chemicals, in that order.
According to the Survey of Production Forecasts in Manufacturing, production was expected to increase 5.6% in June and decrease 0.6% in July. Industrial production shows signs of increasing at a moderate pace.

May 2022                                                           2015 average = 100

Family Income and Expenditure Survey³

(1) Expenditure of Households of Two Persons or More

Average monthly consumption expenditure of households of two or more persons in May was 286,443 yen, down 0.4% in nominal terms and down 4.0% in real terms from the previous year,  declining for the third consecutive month, as more people cut back on spending on transportation and communication. By component in real terms, spending on education rose 9.9%. Transportation and communication expenditure fell 11.4% and furniture & household utensils fell 8.9%.

(2) Income and Expenditures for Workers’ Households

Average monthly income per household stood at 469,992 yen, down 4.0% in nominal terms but down 7.5% in real terms from the previous year. The average level of consumption expenditure was 311,830 yen per month, down 1.0% in nominal terms and down 4.6% in real terms year-on-year.

Consumer Prices⁴

The consumer price index (CPI) in May was 105.1 (2020 = 100), up 3.2% over the previous year and unchanged from the previous month. Core inflation (CPI less food and energy) was up 4.3% over the previous year, marking the fourteenth straight month of increase. Energy prices dipped 3.8%, as electricity bills fell 17.1% due to the government’s subsidization of utility bills for consumers. Food prices (excluding volatile fresh items) rose 9.2%, the fastest pace in nearly 47 years. Egg prices surged 35.6% amid bird flu-related supply concerns.

May 2022

1. Source: Labour Force Survey Monthly Results (Statistics Bureau of Japan)　　　(https://www.stat.go.jp/english/data/roudou/results/month/index.html)
2.  Source: Indices of Industrial Production (Ministry of Economy, Trade and Industry)　　　(https://www.meti.go.jp/english/statistics/tyo/iip/index.html)
3.  Source: Summary of the Latest Month on Family Income and Expenditure Survey (Statistics Bureau of Japan)　　　(https://www.stat.go.jp/english/data/kakei/156.html)
4.  Source: Consumer Price Index (Statistics Bureau of Japan)
   (https://www.stat.go.jp/english/data/cpi/1581-z.html)