Japan Signals Steady Minimum Wage Gains, Backing BOJ’s Hike Path

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Or sign-in if you have an account.i{zykbb10o]bd35wa5dt433m_media_dl_1.png Ministry of Health, Labor and We(Bloomberg) — Japan aims to keep minimum wages rising steadily, signaling income growth across a broad spectrum of the economy remains resilient as the Bank of Japan seeks evidence that pay gains are supporting domestic demand.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountJapan’s Labor Ministry advisory panel on Tuesday recommended raising the nationwide average minimum hourly wage by 4.9% to ¥1,176 ($7.18) for the current fiscal year. While smaller than last year’s record 6.3% increase, it represents a ¥55-per-hour gain, the second-largest rise on record.The new wage floor, which would apply to over 50 million workers, is expected to gradually take effect starting in October after regional authorities finalize their own rates.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againThe recommendation follows another strong round of annual wage negotiations between unions and employers, with workers affiliated with the largest labor federation securing average pay increases above 5% for a third straight year. Rising minimum wages suggest pay gains are spreading beyond large companies to a wider segment of the workforce, as a labor shortage forces firms to compete for workers.That would support the BOJ’s campaign to foster a virtuous cycle linking wage gains to stronger demand and stable price increases, a key component in the case for further rate hikes. Pressure on the central bank to continue raising its benchmark rate has increased as the weak yen inflates the costs of imported energy and food, squeezing household budgets.The BOJ is widely expected to hold its benchmark rate steady when it next sets policy on Friday, as it assesses the impact of last month’s increase to 1%, the highest since 1995.Sustained wage growth is a central concern for Prime Minister Sanae Takaichi’s government as voters grow increasingly frustrated that wage gains have failed to keep pace with inflation. The premier’s public support ratings have started to cool as she is seen by voters as focusing too much attention on pet interests and distant future targets, rather than rising living costs. Her administration, however, has adopted a less ambitious stance on the minimum wage than her predecessor. In its annual economic policy guidelines approved last week, the government pledged to lift the nationwide average minimum wage to ¥1,500 “as early as possible, and no later than the early 2030s.” Former Prime Minister Shigeru Ishiba had pressed for that achievement “by the 2020s.”Labor representatives sought a 6.7% increase at the outset of the process this year.The rapid pace of recent minimum wage increases has created strains for some regional economies. Several prefectures, including Gunma and Akita, were slow to implement last year’s higher wage floor as local businesses struggled to adjust.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.