Japan Press Weekly

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2016 July 20 - 26 [LABOR]

Minimum wage of 1,000 yen will boost consumer demand by 2.48 trillion yen

The trade union think tank, Japan Research Institute of Labor Movement (Rodo-soken), on July 20 released its conclusion of the ripple economic effects of a minimum wage increase, estimating that consumer demand will eventually go up by 2.48 trillion yen if an increase in the minimum wage to 1,000 yen per hour is implemented.

Rodo-soken, which is affiliated with the National Confederation of Trade Unions (Zenroren), estimates that this increase in consumption will lead to an expansion of domestic production by 4.59 trillion yen and the associated production increase would push up Japan’s GDP by 2.06 trillion yen. Such a positive growth cycle would create 249,700 new jobs, according to Rodo-soken’s projection.

In addition, the labor think tank projects that a 1,000-yen minimum wage would bring about an extra 226.4 billion yen in tax revenues to the national government and 149.9 billion yen to local governments, totaling 376.3 billion yen.

If the minimum wage is raised to 1,500 yen, the amount of increase in net consumer demand and domestic output would be 16.22 trillion yen and 30.06 trillion yen, respectively. Accordingly, GDP would increase by 13.52 trillion yen and would contribute to an additional 1,636,100 jobs. As for tax revenues at national and local levels, an increase would amount to about 1.48 trillion yen and 986.7 billion yen, respectively.

Rodo-soken, by citing the labor ministry’s statistical survey which shows that workers receiving below the current minimum wage account for 9.7% of all workers, points out the importance of instructing employers to comply with the minimum wage regulations in parallel with raising minimum wages in all prefectures.

Past related article:
> Labor think tank: monthly pay hike of 59,000 yen is possible [January 21, 2016]