The rising cost of even basic staples such as eggs and vegetables has many in Japan screaming for economic relief. In response, Japan’s government says it wants to raise the country’s minimum wage. However, a new survey shows resistance among businesses, many of whom say they can’t afford to pay that much.
Wages have remained relatively stagnant in Japan now for decades, even as the cost of everything increases. Increases in the national minimum wage have remained very modest. Earlier this year in July, the government increased the minimum wage nationwide from 1,004 yen (USD $6.55) to 1,055 yen ($6.88) – a 50 yen ($0.33) increase.
Even that modest increase caused some businesses to recoil. Some small- to medium-size businesses say they’re already struggling to cover rising utility costs, as well as food and drink costs that have risen by around 10% compared to last year.
Despite this, the government under Prime Minister Ishiba Shigeru continues to pursue a policy through the 2020s of steadily raising the minimum wage. The goal is to bring it up to 1,500 yen ($9.79) by the mid-2030s.
However, many businesses aren’t on board. A survey conducted by Tokyo Shogo Research from December 2nd to December 9th surveyed 5,277 companies about whether they found the goal realistic. 48.4%, or 2,558 companies, said the wage hike was “impossible” without further support from the government.
In a spot of good news, 15.1% of respondents (802 companies) said they were already paying a 1500 yen hourly wage.
Between January and November of this year, some 93 businesses have gone bankrupt. That’s an increase from 59 in the same period last year. Some businesses and economists fear that a higher wage, combined with rising prices, could push more businesses out of business.
Japan has struggled in recent years, not just with wages, but with labor supply, as a combination of population decline and rising tax burdens have led to fewer people in the workplace. Some businesses, such as convenience stores, are increasingly relying on foreign labor to fill in the gaps.
Foreign businesses like Costco and IKEA have drawn attention in the last year for paying well above Japan’s minimum wage, even in areas of the country where the cost of living is lower. Some local businesses complain that these companies are making it even harder to compete for workers.
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