Suga's push for higher minimum wage faces resistance

TOKYO • Prime Minister Yoshihide Suga's plan to boost the minimum wage is facing opposition from Japan's small and mid-size firms, worried about their survival during Covid-19, and from lawmakers in his own ruling party amid concerns of a political backlash.

Mr Suga last month said the government aims to bring Japan's minimum wage, among the lowest in the Group of Seven economies, to 1,000 yen (S$12.30) an hour from 902 yen "more quickly".

He believes the hike would help support coronavirus-hit households, boost competitiveness and spur inflation, according to government sources.

But smaller firms, which employ seven out of 10 workers in Japan, have lobbied to scrap the plans.

Some of Mr Suga's own Liberal Democratic Party (LDP) lawmakers are also pushing back amid concerns they could lose support from business owners in an election year, official sources said.

The heads of three lobby groups representing small firms held a rare joint news conference earlier this month to express their opposition to the minimum wage hike and wrote jointly to government and ruling party officials urging against the move, an official at Japan Chamber of Commerce and Industry said.

"The joint action was unprecedented, and was made to express the collective opinion of small firms," the official told Reuters.

Mr Akio Mimura, head of the same business group, told the news conference this month that the tourism and restaurant industries were facing a tougher time this year compared to 2020.

"I hear many voices of anxiety from small firms across the country," Mr Mimura said.

Japanese policymakers have long considered wage hikes a tool to boost consumer spending and fuel inflation, which remains elusive in the country despite years of ultra-loose monetary policy.

In theory, higher minimum wages could also help garner political support as it boosts people's purchasing power.

"The quickest way out of deflation is to raise minimum wages and boost workers' income as part of a reflationary policy," said Mr Shunsuke Mutai, who is among a small minority of LDP lawmakers seeking minimum wage hikes.

But he said some fellow lawmakers are "urging us to think twice about calling for minimum wage hikes", adding: "They say voters won't support us because we are antagonising small firms."

Under Mr Suga's predecessor Shinzo Abe, the government raised the minimum wage by 3 per cent for four years until last year, when it was held largely steady.

At about US$8 (S$10.60) per hour, Japan's minimum wage is higher than the US$7.30 in the United States but below France and Germany's US$12, Britain and Canada's US$10 and South Korea's US$8.60.

REUTERS