Japan’s weighted average minimum hourly wage is set to rise above JPY 1,000 (USD 6.86) for the first time, reports Nippon, citing the Central Minimum Wages Council. The average wage will be JPY 1,002 for this fiscal year, up JPY 41 (USD 0.28) from the current JPY 961 (USD 6.59). The subcommittee’s guidelines divide prefectures (small administrative areas) into three categories according to their economic conditions. On the basis of the guidelines, the actual amount of the increase will be decided by the council for each prefecture, with the new minimum wages coming into effect around October 2023.

According to Nikkei, the government has been aiming for an average nationwide minimum wage of JPY 1,000 since the mid-2010s. But many smaller companies have lacked the resources to offer higher pay, and government support in boosting profitability and passing on labour costs is essential. The increase is expected to drive up wages particularly in the service industry, which has faced a persistent labour shortage. Pressure could grow on businesses in the sector to bolster profitability.

Japanese Prime Minister Fumio Kishida said, "We will pursue policies to help businesses boost productivity and pass on labour costs, so that higher wages extend to smaller businesses."