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2022 May 11 - 17 TOP3 [ECONOMY]

Minimum hourly wage hike vital to reduce adverse impact of price surge

Akahata editorial (excerpts)

A surge in prices due to supply chain disruptions mainly caused by the COVID-19 pandemic and Russia’s invasion of Ukraine has become serious. In Japan, the abnormally weak yen which has been created through quantitative easing measures under the “Abenomics” economic policy is fueling price inflation. Under this situation, an increase in minimum hourly wages and a reduction in the consumption tax rate are vital to ease impacts of skyrocketing prices on the general public, especially on low-income individuals.

Amid the worldwide price hike, more and more major countries have decided to increase their minimum wages. The U.K.’s minimum hourly wage went up to 9.5 pounds in April, France’s to 10.85 euros in May, and Germany’s to 12 euros in October. In the U.S., the minimum wage in Los Angeles, for example, will be raised to 16.04 dollars an hour in July. Converted into yen, minimum hourly wages in these countries are between 1,500-2,000 yen.

In contrast, Japan has been very slow in increasing the minimum wage. In Japan, the average minimum wage in FY2021 stood at 930 yen an hour, which amounts to about 1.7 million yen a year, the working-poor level.

The results of a survey by the National Confederation of Trade Unions (Zenroren) on the minimum cost of living indicate that a 25-year-old single person living in Osaka would need a monthly wage of at least 244,951 yen, equivalent to 1,633 yen per hour, to cover his/her basic daily needs.

It is urgently needed for Japan to increase the minimum hourly wage substantially in order to boost the country's economy. The Cabinet Office on March 3 at a meeting of its Council on Economic and Fiscal Policy presented data which recognize that the widespread use of non-regular workers is a factor for the increase in the number of low-income earners whose annual earnings remain at the 2-million-yen level.

A minimum wage hike is very effective in not only providing higher wages to non-regular workers but also decreasing economic inequality. In addition, if the minimum wage is increased, it will contribute to higher consumption and energize the Japanese economy.

In a survey conducted jointly by the Japan Chamber of Commerce and Industry and its Tokyo chapter in April, the percentage of small- and medium-sized enterprises which support higher minimum wages increased to 41.7% from 28.1% in 2021 while 36.6% said that the current minimum wage level should be maintained.

Under the 10-year-long “Abenomics” economic policy, large corporations enjoyed tax breaks amounting to 40 trillion yen. The Japanese Communist Party proposes that these companies return 10 trillion yen in their internal reserves to the state coffer in the form of taxes so that the government can use this additional tax revenue to reduce SMEs’ burden of paying social insurance premiums, which will help them to increase their employees’ wages. The need now is to increase public movements that push the government to take measures to realize a substantial increase in the minimum wage.