Japanese political parties have pledged to raise the minimum wage, a commitment that particularly threatens small businesses that have been struggling to cope with rising costs. These businesses account for two-thirds of Japan's employment and more than half of the country's economic output.
Opinion polls suggest that the Liberal Democratic Party (LDP), led by Prime Minister Shinzo Abe, may struggle to maintain its majority in the parliament. The party has pledged to raise the minimum hourly wage standard by 42% to 1,500 yen ($9.80) by the end of 2030. The LDP's previous goal was to achieve this by the mid-2030s.
Japan's main opposition party, the Constitutional Democratic Party of Japan, and other political parties have promised to raise the minimum wage to at least this level, but without specifying a timeframe.
Politicians have not provided many details on how they will help businesses offset the costs of raising the minimum wage, which has led the Japan Business Federation (Keidanren), the country's main business lobby group, to sound the alarm this week.
The head of the business lobbying group, Masakazu Tokura, said at a press conference, "We must aim for challenging goals, but I am uneasy about pushing for something that is completely impossible." He added that the pace of wage increases needed to achieve the LDP's goal may be difficult for many small businesses to keep up with.
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Due to high prices, interest rates, and labor shortages, the number of business bankruptcies in Japan is expected to reach an 11-year high this year.
To help low-income workers, large companies have raised wages by 5.1% this year, the highest in 30 years, and the government has decided to raise the minimum hourly wage by about 5% to 1,055 yen ($6.90).
Koichi Kurosawa, Secretary-General of the National Confederation of Trade Unions, said, "We have waited a long time, but we are pleased to see political parties reaching a consensus on the issue of the minimum wage."
The unions are demanding an immediate increase in the minimum wage to 1,500 yen. According to the Japan Research Institute of Labor Movement, nearly half of the workforce, or about 28 million people, earn less than 1,500 yen per hour, so raising the minimum wage would benefit the workforce. The average annual salary in Japan is $39,000, well below the average of $49,000 in OECD developed economies.
Data from the credit research company Teikoku Databank shows that in the six months through September, the number of bankruptcies in Japan surged 18.6% from the same period last year to 4,990, with the number of insolvencies caused by inflation reaching a record high.The Liberal Democratic Party and other political parties have indicated that they will help businesses offset costs through measures such as tax cuts or subsidies, but have not provided many details.
Takeshi Nishimura, the manager of the Big Yosan supermarket in Yokohama, said, "The minimum wage of 1000 yen is already difficult to cope with. If it increases to 1500 yen, it will be even harder for us small businesses to survive."
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