Providing support to smaller firms vital for raising minimum wage

The Yomiuri ShimbunA raise in the mandatory, minimum hourly wage has been decided. The challenge lies in how conditions for realizing it should be created.

The Health, Labor and Welfare Ministry’s Central Minimum Wages Council has settled on a proposal for lifting minimum hourly wages by an average of ¥27 nationally for fiscal 2019. The rate of increase is 3 percent, marking the same increase for four consecutive years. The range of the hike has been set by taking into account the government-advocated target of “raising it by about 3 percent every year.”

When minimum wages are raised by each prefecture in line with the proposed yardstick, the minimum hourly wages will average ¥901 nationally, with the wages in Tokyo and Kanagawa reaching the ¥1,000-level for the first time. It should be rated highly that the minimum hourly wages applicable to every worker have steadily been rising.

An increase in the wage level will stimulate consumption, thus leading to economic revitalization. It will also prove effective in bringing out the will to work among women and the elderly.

Worrisome is the possible impact of rapid wage hikes for the management of small and midsize companies.

According to a survey that the Japan Chamber of Commerce and Industry conducted this spring, covering small and midsize enterprises, about 60 percent of them said their operations will be affected should the minimum wage be raised by ¥30. There have also been such worries sent to the chamber that companies would be forced to consider cutting back the number of workers or even discontinuing their businesses.

If companies are able to boost their productivity and increase their sales, there would be room for them to raise their workers’ wages. But there are many smaller companies that are short of capital for investment in facilities. Assistance for these business enterprises will hold the key.

Address regional disparities

The labor ministry has established a system under which it subsidizes a part of such expenses as those regarding capital investment for small and midsize companies that have raised their workers’ wages above a certain amount.

A retailer in Aomori Prefecture has, thanks to the subsidy, mechanized the work process of making labels put on its merchandise, thereby becoming able to raise hourly wages of workers by ¥40. A food processing company in Niigata Prefecture has introduced a conveyor belt to make operations to arrange food in bento boxed meals more efficient and realized a ¥30 increase in hourly wages for workers.

It is important to expand such assistance programs and to increase services at counters for companies to be able to seek consultation. Through painstaking responses, wage hikes by companies should be supported.

It is also worrisome that the regional gap in minimum wages has yet to be solved. The difference in minimum wages between Tokyo, where the minimum wage is the highest, and Kagoshima, where it is the lowest of the prefectures, stands at ¥226, up 40 percent from 10 years ago.

Should such disparities be left unaddressed, there is also concern that young people and foreign workers may leave rural areas for big cities in search of higher wages.

In rural areas, there have also arisen calls from workers for raising wages further, but there are not many companies that can afford to do so. Relevant councils in each prefecture, which will decide on their respective minimum wage increases, should make their final decisions by considering price levels of commodities in and economic conditions of local communities.

(From The Yomiuri Shimbun, Aug. 6, 2019)Speech


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