Costco Japan Pays Workers a Fair Wage, Local Businesses Seethe

Costco Japan Pays Workers a Fair Wage, Local Businesses Seethe

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Costco wages rising
Costco wages rising
Costco Japan says it'll pay a higher than market wage in all its warehouses countrywide. That has some local business owners fuming.

Workers in Japan are struggling to make ends meet amidst rising prices. One international employer has said it’s going to give its workers some relief – and that’s left some local companies grousing.

Rising prices, stagnant wages

Wages in Japan
Picture: akiyoko / PIXTA(ピクスタ)

The wage situation in Japan has been desperate for some time now. As I’ve previously written, wages haven’t progressed in three decades. While wages in Europe hover between 1500 and 2300 yen an hour (USD $10.43 to $16.22 at the time of writing), in Japan, they average out at around 961 yen (USD $6.78).

For the most part, this has been balanced out by Japan’s relatively affordable cost of living. Rents remain reasonable even in major cities like Tokyo. And companies have held many consumer prices steady. (Though they have engaged in a stealthy process of shrinkflation for well over a decade.)

But along with the rest of the world, Japan now also finds itself struggling with rising fuel and materials costs. That’s led to price hikes and shortages, with some manufacturers raising point of sales prices for the first time in years. Just this month, McDonald’s Japan raised prices for the second time this year. Consumers have also found themselves bitten hard by spikes in utility costs.

The rising cost of living has sparked renewed discussion in Japanese news of wage increases. In June, Prime Minister Kishida Fumio vowed to spearhead investments and programs to raise wages across the board, vowing to steer Japan towards becoming “an economy where wage hikes are commonplace.”

Costco to pay a uniform wage, regardless of location

A Japanese YouTube video covering the creator’s views on the 10 “must-buy” warehouse items in 2023. The creator’s name is, cleverly, コス子ちゃんねる (Kosu-ko channeru), with the “ko” sound replaced with the character 子 for “kid” or “girl”. Her channel has 125,000 subscribers.

Kishida says he aims to bring Japan’s average hourly wage closer to 1000 yen (USD $7.05). He’s also urged companies to take steps to raise wages voluntarily. While some large employers have taken him up on that call, it’s status quo everywhere else.

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However, one retailer is shattering the wage ceiling.

Kirkland, WA-based Costco is a “wholesale club” that sells merchandise in bulk at discount rates to members. The retailer is beloved by most of its members for its selection and pricing. (It’s famously kept its hot dog and soda combo in the US at $1.50 since 1985 – and has vowed to maintain the price “forever”.)

It’s also known for treating its employees decently. In 2020, the company raised its starting wage in the US to $17/hour. And now, it’s bringing that high watermark to Japan.

Japan is Costco’s fourth-largest market, with 38 stores spread across the country. The store is popular in cost-conscious Japan, and there’s something of a minor industry of YouTube creators who document their hauls and discuss the best deals.

And Costco Japan is hiring. As noted by Toyo Keizai and other publications, the company is hiring for register and stocking positions uniformly at a starting wage of 1500 yen (appr. USD $10.58) – regardless of where in Japan the warehouse is located.

“We can’t pay that!”

Office workers thinking about money (yen)
Picture: metamorworks / PIXTA(ピクスタ)

The news isn’t sitting well with some local businesses, however.

Costco’s uniform wage policy means that it’ll be paying 1500 yen an hour even in places like Gunma Prefecture, where the lowest hourly wage is 895 yen (USD $6.31). That has business owners complaining that they won’t be able to compete for labor.

A gas station owner groused, “I can’t pay 1500 yen….we can’t behave like a multinational corporation.”

Japan’s aging and declining population means many of its key businesses remain perpetually understaffed. Retailers like Costco offering wages closer to the international standard will make competing for workers even harder.

“There will always be work”

But News Post Seven says that some workers may not just be attracted to Costco because of the high wage, but due to the transparency. The article quotes experts and workers as noting that, in Japan, wages are often determined, not by any market standard, but by the whims and feelings of the employer. Compared to that, Costco’s transparency feels like a breath of fresh air to many.

The Yahoo! News comments section of this article drew over 5,000 comments. The common consensus? Japanese businesses need to step up – or go out of business.

“A lot of food industry pros come to me and say, ‘It’s tough because there aren’t any workers,'” wrote food journalist Yamaji Rikiya. “To which I respond, ‘There are plenty of people – just not at that wage.'”

Another comment with over 38,000 likes said they don’t mind if higher wages bankrupted businesses, as some employers claim will happen. “The notion that joblessness will increase if businesses fail is a lie told by owners. There will always be work for workers, even if the owners are left desolate on the streets.”

Japan’s businesses claim they can’t hire people. But there’s mounting evidence that there are plenty of people who want to work – just not at unsustainable wages.

This Might Be the Worst Time to Work in Japan

Sources

全国各地でコストコ「高時給求人」の衝撃広がる 群馬の経営者は「時給1500円は無理」と嘆息. News Post Seven

コストコ時給1500円が安いニッポンに与える影響. Toyo Keizai

再び値上げのマクドナルド 近くの店舗で異なる価格?止まらぬ値上げに学生への影響も…【news23】. TBS News Dig

岸田首相「構造的な賃上げ実現」 子育て財源言及せず. Nikkei

コストコについて。Costco Japan

Costco raised its minimum wage to $17 an hour. CNN

Don’t worry, Costco commits to $1.50 hot dog and soda combo price — maybe ‘forever’. USA Today

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Jay Allen

Jay manages the technical writing practice for ercule, an SEO, content strategy and analytics firm. A lifelong geek, wordsmith, and language fanatic, he has level N1 certification in the Japanese Language Proficiency Test (JLPT).

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