Hike in minimum wages

Hourly minimum wages are set to create a society in which all people can earn a living if they work diligently. The Central Minimum Wages Council of the Ministry of Health, Labor and Welfare has decided on an average raise of 15 yen in minimum hourly wages set by prefectures.

In its manifesto for the Lower House election last year, the Democratic Party of Japan proposed a national minimum wage of 800 yen ($9.24) an hour.

The council’s discussions ran late because of a deep rift between labor and management. Labor representatives sought an early implementation of the 800-yen target while corporate representatives were concerned that added labor costs could affect the economy and worsen the performances of small and midsized companies.

Nevertheless, they agreed upon the largest raise because the significance of minimum wages has changed drastically.

The minimum wage is on par with the starting wages of young new employees living with their parents. The seniority-based pay scales were designed so that young regular employees would earn enough to support a family when they are in their 30s.

However, due to the economic downturn since the 1990s, the number of nonregular workers with few prospects of a pay raise has increased to about one-third of workers. Within this structure, low minimum wages can easily put people in “working poor” situations.

The current nationwide average minimum wage stands at 713 yen per hour. Even those who work full-time hours can earn only 1.5 million yen a year. Among workers with annual incomes of less than 2 million yen, nearly one in every five is a household head.

In 12 prefectures, minimum wages are lower than public welfare assistance. This topsy-turvy situation could deprive the people of the will to work.

European nations have been continuously increasing minimum wages, based on the principle that companies are responsible for guaranteeing their employees wages sufficient to maintain their livelihoods. Companies that can no longer do this must leave to make room for new businesses.

The U.S. minimum wage was one of the lowest among leading economies. In response to criticism about growing income gaps and poverty, the federal minimum wage was raised by 40 percent to $7.25 an hour during the three years through 2009.

To show the council’s will to raise the bottom level of minimum wages, its guidelines call for a considerable hike of 10 yen in areas, such as Aomori and Okinawa prefectures, where minimum wages are lower.

Even if the minimum wages are raised to 800 yen an hour, the annual income for those who work full-time hours would fall short of 2 million yen. With that level of income, workers would not be able to cover the costs of living in Japan, where they must pay for housing and child education.

The raising of minimum wages will not function effectively without the creation of a comprehensive “anti-poverty” framework. We must keep firmly in mind that the “raise is a beginning.”