Government Panel Agreed National Average Minimum Wage Hike of 3.3% to 961 Yen

On August 1, Japan’s tripartite Central Minimum Wage Council, which consists of six members respectively representing the public interest, labour, and management, announced that its proposed minimum wage hike guideline for fiscal 2022 was a national average of 31 yen/hour, the equivalent of a 3.3% hike to 961 yen ($7.38), ending prolonged discussions as Japan battles accelerating inflation. If implemented, this would be the highest increase since fiscal 2002, when the council started using the hourly wage to propose a rough target for hikes. Moreover, the rise would be higher than the average 2.07% hike achieved by trade unions affiliated with RENGO (Japanese Trade Union Confederation) in this year’s spring wage negotiations.

As the next step, Minimum Wage Councils in each prefecture will decide new regional minimum wages in consideration of regional economic conditions. The new minimum hourly wages will be adopted around October.

Prime Minister Fumio Kishida is calling for more investment in people as he focuses on redistribution under his slogan of creating a “new capitalism.” The government is aiming to increase the minimum wage across the nation to 1,000 yen ($7.7) as soon as possible to help non-regular workers earn more and to mitigate their wage disparity with regular employees.

Labour Force Survey Monthly Results¹

(1) Employment

The number of employed persons in June 2022 was 67.59 million, an increase of 210,000 over the same month the previous year. By gender, this included 37.17 million men, down 30,000 from the previous year, and 30.41 million women, up 230,000.

(2) Unemployment

The number of unemployed persons in June 2022 was 1.86 million, a decrease of 210,000 from the same month in the previous year, for the eleventh straight monthly decline. The seasonally adjusted unemployment rate in June was 2.6%, unchanged from the previous month. The unemployment rate for men was 2.7%, down 0.1 % from the previous month and 2.5% for women, up 0.1% over the previous month.

(3) Job Availability

Japan’s job availability in June stood at 1.27, up 0.03 over the previous month, showing an improvement for the sixth straight month. This figure means there were 127 jobs available for every 100 jobseekers. It was the highest ratio since 1.31 in June 2020, when the Japanese government declared the COVID-19 state of emergency for the first time. The ratio of regular employee job offers to applicants was 0.91, up 0.01 over the previous month. The ratio of new job offers to applicants, a leading indicator for the labour market, was 2.24, down 0.03 from the previous month.

Industrial Production ²

Japan’s industrial output in June increased a record 8.9% from the previous month, marking the highest month-on-month increase since comparable data became available in February 2013, as the relaxation of COVID-19 lockdowns in China and the easing of parts shortages drove the first rise in three months.
While production, shipments and inventories all increased, inventory ratio decreased.
The industries that mainly contributed to the increase were as follows: (1) motor vehicles; (2) electrical machinery, and information and communication electronics equipment; and (3) electronic parts and devices, in that order.
According to the Survey of Production Forecasts in Manufacturing, production was expected to increase by 3.8% in July and by 6.0% in August.

Family Income and Expenditure Survey ³

(1) Expenditure of Households of Two Persons or More

Average monthly consumption expenditure of households of two or more persons in June was 276,885 yen, up 6.4% in nominal terms and up 3.5% in real terms from the previous year, increasing for the first time in four months, as more people ventured out after the lifting of coronavirus restrictions. By component, spending on culture and recreation rose 13.3% in real terms from a year earlier.

(2) Income and Expenditures for Workers’ Households

Average monthly income per household stood at 916,705 yen (including bonus payments), up 1.4% in nominal terms but down 1.4% in real terms from the previous year. The average level of consumption expenditure was 300,489 yen per month, up 6.9% in nominal terms and up 4.3% in real terms year-on-year.

Consumer Prices ⁴

The consumer price index (CPI) in June was 101.8 (2020 = 100), up 2.4% over the previous year and up 0.1% over the previous month, driven by higher commodity prices and a weak yen. Core inflation (CPI less food and energy) was up 1.0% over the previous year, marking the third straight month of increase. Energy prices surged 16.5%, with gasoline, kerosene, city gas, and electricity bills all marking double-digit gains.
Consumer prices, including fresh food, are expected to rise 2.6 % in the current fiscal year through March from a year earlier, mainly due to Russia’s invasion of Ukraine and the impact of the yen’s depreciation, the Cabinet Office announced on August 1.

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)