Minimum Wage in Japan: A Comparison with South Korea and New Perspectives

In recent years, the perception that Japan's prices are lower than South Korea's has spread in South Korea. While the weak yen plays a role, data such as the Starbucks Index also shows that prices are lower in Japan than in South Korea. However, low prices do not necessarily mean that living in Japan is easy. The minimum wage level, in particular, is an important factor directly related to quality of life. This article will use an article from the Hankyoreh newspaper as a reference to explain in detail the situation surrounding Japan's minimum wage, particularly in comparison with South Korea, and the disparity problem between regions. Furthermore, we will also touch upon the history and decision-making process of Japan's minimum wage system, aiming for a deeper understanding.

Comparison of Minimum Wages in South Korea and Japan

The Hankyoreh newspaper article highlights Tokushima Prefecture's significant minimum wage increase. Tokushima Prefecture's minimum wage for fiscal year 2024 is ¥980, a 9.4% increase from the previous year. On the other hand, South Korea's minimum wage for fiscal year 2024 is 10,300 won (approximately ¥1090), an increase of only 1.7% from the previous year. At first glance, it may seem that South Korea's minimum wage is higher. However, the article points out that while actual wages often exceed the minimum wage in Japanese convenience stores, for example, in South Korea, the minimum wage is the "most common salary" for many low-wage workers. In other words, a simple comparison of amounts alone cannot accurately measure the living standards of workers in both countries.

Disparity Problem Between Regions

Japan's minimum wage is set for each prefecture. Therefore, there are differences in minimum wages depending on the region. For example, in fiscal year 2023, Tokyo had the highest minimum wage at ¥1113, while Okinawa Prefecture had the lowest at ¥853. The Hankyoreh newspaper article states that the background to Tokushima Prefecture's significant minimum wage increase was a sense of crisis that low minimum wages were leading to an outflow of young people from the prefecture. There are also suggestions that a "chicken game" situation is developing among local governments, with competition to raise minimum wages.

History and Decision-Making Process of Japan's Minimum Wage System

Japan's minimum wage system is based on the Minimum Wage Law enacted in 1959. Initially, there were multiple determination methods, such as inter-industry agreements; however, since the 1968 revision, the Minimum Wage Council system has been adopted. The Minimum Wage Council is composed of three parties: public members, employer members, and worker members. The council decides on the minimum wage by considering the worker's cost of living, wages of similar workers, and the wage-paying capacity of normal businesses. In recent years, the 2007 revision of the Minimum Wage Law stipulated the need to consider consistency with the livelihood protection standard. As a result, it is required that the minimum wage level does not fall below the livelihood protection standard.

A New Perspective: Minimum Wage and Economic Growth

While raising the minimum wage contributes to improving workers' living standards, there are also concerns that it will lead to increased burdens on companies. The impact is particularly large on small and medium-sized enterprises. However, in recent years, research results have emerged showing that raising the minimum wage promotes economic growth. This is the idea that raising the minimum wage increases consumption among low-income earners, which in turn leads to the revitalization of the entire economy. Raising the minimum wage is also said to have the effect of encouraging increased productivity among businesses.

Summary

Japan's minimum wage cannot be simply compared to South Korea's, but it faces various challenges, including regional disparities and its relationship with the livelihood protection standard. Raising the minimum wage could lead not only to improved living standards for workers, but also to economic growth. In the future, attention will be focused on the role that the minimum wage will play in Japanese society.