No. 49(October 2010)

Address: Rodo-Soken
1-9-1,Hirakawacho Chiyoda-Ku,
Tokyo, 102-0093 Japan
Phone :
Fax :
E-mail :

The struggle for minimum wage increase in steady progress

OHKI Hisashi

Vice President

Zenroren-National Union of General Workers (Zenroren-ZENKOKU-IPPAN)

Minimum wage increase is essential for eradicating poverty and narrowing economic inequalities

The past 15 years have seen poverty increasing and economic disparities further widening in Japan under the neo-liberal policy of "structural reform" driven by the economic globalization. With the labor market as well as the economy in general having been deregulated. Many full-time regular employees have been replaced with contingent workers. Small- and medium-sized businesses and regional economies are crumbling. The public has been forced to pay more in tax and endure cutbacks in social services.

Consequently, the unemployment rate has risen to 5 percent (10 percent among young people) from 2 percent. One in every three workers (one in every two among young people and women) is a contingent worker. One in every five is classified as "working poor" with an annual income of less than two million yen, amount that is lower than the social welfare benefits.

Japan's poverty rate is the second highest among the industrialized economies. Japan's poverty rate among single-parent households and its suicide rate are higher than any other country. The income gap has widened gaps in living standards in general as well as education and health care. Parents' poverty is directly linked to child poverty, increasing poverty among children and young people, who are the mirror of the future of the society.

The nation's wealth produced by working people is held by large corporations and the wealthy -a tiny portion of the population. In the past 15 years internal reserves held by large corporations have doubled; compensation for their executives has tripled; and dividends to shareholders doubled. These factors have worsened the nation's economy.

Look at the growth in GDP and in employers' compensation in Group of Seven countries (1997-2007). Japan's economy grew by just 0.4 percent while other G7 countries registered a growth ranging between 27 percent and 74 percent. Workers' compensation showed a minus growth of 5.2 percent while it grew 27-74 percent in other G7 countries. Only Japan has become a country without economic growth driving more people into poverty.

These are consequences of not only the policies pursued by the government and the business sector. Labor unions at large corporations are responsible because they have supported wage restraint, cost-cutting "restructuring" and deregulation. The National Confederation of Trade Unions (Zenroren), which consists mainly of unions of public service workers and small- and medium-sized company employees, are acutely aware of its responsibility and role to fulfill on this issue, is demanding that large corporations use a part of their huge internal reserves for the benefit of society in general. Zenroren is also leading the movement demanding that the government take measures to ensure a minimum wage for every worker to be able to live and work with dignity, eradicate poverty, reduce the economic gap, and take steps to boost the economy and expand domestic demand.

Poverty and economic inequalities have been growing during the past ten years. At a time when many countries have raised the minimum wage to improve the living standards and help expand domestic demand, Japanese workers have been given very modest minimum wage increases. Still, the movement calling for a minimum wage ensuring that everyone can lead a life with dignity has made steady advances. Our movement has thus paved the way for the substantial improvement in wages by having the government Minimum Wage Council recommend a rise for the last four years in a row.

Japan's minimum wage is lowest among the industrialized countries

A series of countries, mainly industrialized countries, are making efforts to eliminate poverty by radically increasing the minimum wage and reviewing their respective minimum wage law. Japan's minimum wage is the lowest among the industrialized countries. In Japan, the average of regional minimum wages [Japan has no national uniform minimum wage] is 730 yen, or about 8.5 dollars and five euros, per hour.

Minimum wages in Europe range from 1,320 euros to 1,640 euros per month, or 8.1-8.9 euros per hour. In purchasing power parity, the monthly European minimum wage is between 210,000 yen and 250,000 yen, double the average minimum wages in Japan.

Up until three years ago, Japan's minimum wages were not based on the principle that the minimum standard of living must be ensured. In fact, minimum wages were only 60 percent of the amount of social welfare benefits. Thus, Japan's regional minimum wages have been held at 30 percent of the average wages. Minimum wages in major European countries are around 50 percent of their respective average wages. They are aiming to eradicate by maintaining the minimum wage at 50 percent of the average wages and take workers out of work with low wages by raising it to 60 percent of the average wages.

Encouraged by the recent substantial minimum wage increases in Europe, we have been trying to expand solidarity between the union movement and the general public in order to press the government to raise the minimum wage to a level that ensures living standards for all to live with dignity. At last in 2007, our struggle led to a revision to the Minimum Wage Law for the first time in 39 years. The revised law came into force in 2008. Although we still have to go on struggling to achieve a national uniform minimum wage system, we won the law's revision to provide a minimum wage to guarantee the right to live.

In Japan, in the absence of a national uniform minimum wage system, 47 prefectures set their respective minimum wages. There are two minimum wages in Japan: regional minimum wages and industrial minimum wages. A minimum wage is determined based on three principles. First, the minimum wage will ensure the cost of living needed to exercise the constitutional "right to maintain the minimum standards of wholesome and cultured living." The revised law calls for attention to be paid to the need to maintain consistency with the level of social welfare assistance. Second, the law in the past provided that wages for workers doing similar jobs are comparable only in smaller business establishments employing 29 people or less. The revised law changed this provision to make comparison with the region's general workers' wages. These two revisions provided conditions for the minimum wages to be raised substantially. As to the third principle, we have been unable to delete the provision of employers' ability to pay wages.

Decision to change the minimum wage in Japan is made based on recommendations by the central and prefectural minimum wage councils. The Health, Labor and Welfare Ministry determines a benchmark for minimum wage increase after receiving Central Minimum Wage Council's advisory opinion. The regional minimum wage councils in 47 prefectures will hold deliberation to help the prefectural Labor Bureau decide on their respective minimum wages. The minimum wage has a bearing on 50 million private sector workers. The minimum wage council consists of representatives of public interest, labor and employers. The seats allotted to labor representatives are monopolized by the Japanese Trade Union Confederation (RENGO). Zenroren, which is unjustifiably excluded from the panel, has filed complaints with the ILO. The Japanese government has consistently ignored the ILO's call for correction of such practices.

The minimum wage is also set for particular industries in each of the 47 prefectures. About four million workers are covered by industrial minimum wages, which is about 10 percent higher than regional minimum wages.

Minimum wage should be living wage in the light of widening gap between rich and poor

The cabinet led by Prime Minister KOIZUMI Jun'ichiro between 2001 and 2006 imposed neo-liberal "structural reform" policies. It attempted to freeze and even lower the regional minimum wage while trying to abolish the industrial minimum wage in response to the financial circles' demand. We thwarted this attempt, but the minimum wage was increased only by 14 yen per hour during six years (on average 2.3 yen a year), or 1.5 percent.

Zenroren initiated a nationwide campaign for a national uniform minimum wage of at least 1,000 yen per hour so that every worker can live a life with dignity. It argued how absurd it is for the minimum wage is below the poverty line, which is used to provide social welfare benefits, calling for the right to live to be guaranteed. Many contingent workers, small- and medium-sized enterprise workers and public sector workers and young workers took part in this campaign.

Participants in the minimum wage campaign took to the streets for publicity and signature collection to put pressure on the government. They exposed the real miserable living conditions of low-income earners. They also urged local assemblies to adopt resolutions or opinion letters calling on the government to raise the minimum wage to help workers live a decent life. This campaign drew media attention. Progressive parties, notably the Japanese Communist Party, supported our call and worked hard in the Diet and local assemblies to realize our demand.

However, the Ministry of Health, Labor and Welfare has rejected our demand on the grounds that "the minimum wage system and the livelihood protection (social welfare benefits) system are different." Rengo also maintained the same view. However, with the number of contingent workers and the poverty rate increasing dramatically, many scholars and other experts as well as mass media and wide ranging public opinion rallied behind Zenroren's policy proposal. Reng o in 2003 stopped demanding a minimum wage higher than the previous year's and began to call for a "living wage" to be established insisting that the minimum wage should be at least 840 yen per hour.

Mass media have come to take up the problem of "working poor" as well as economic inequalities. The term "working poor" was chosen as a term used most in 2006. It was really a serious social problem. Japan and the United States were at the bottom of the list of major countries in terms of the minimum wage. In 2006, the U.S. mid-term election was fought around the issue of "war and poverty." The Democrats, who promised to raise the minimum wage in 3 years, from 5.15 dollars to 7.25 dollars per hour for the next three years (up 2.1 percent), restored its majority position. This shocked the cabinet led by Prime Ministe ABE Shinzo and Rengo.

Taking into account the result of the 2007 House of Councilors election, the Abe Cabinet was forced to come up with a bill to revise the Minimum Wage Law to include a provision on "consistency between the minimum wage and livelihood protection benefits." At a critical juncture in February 2007, the Japan Research Institute of the Labour Movement (Rodo-soken) published a report entitled "Raising the minimum wage will have an economic ripple effect ," arguing that the minimum wage set at 1,000 yen per hour will increase the total compensation by 2.2 trillion yen, which in turn will encourage people to spend money, trigger an increase in production, and expand GDP by 260 million yen, helping small- and medium-sized businesses increase sales. Mass media reported the Rodo-soken report extensively.

Rengo has decided to demand that the minimum wage be set at 1,000 yen or more just as Zenroren is calling for. On this year's May Day all labor organizations demanded a minimum wage of at least 1,000 yen per hour and eradication of poverty. The bill to revise the Minimum Wage Law was enacted. Even after the economic crisis breaking out in late 2008, the government sought to use this legislation to fill the gap between the minimum wage and livelihood protection benefits by raising the minimum wage more than in the past.

The struggle for minimum wage increase made progress in 2010 by repelling the adverse winds blowing from the financial circles

The 2008 House of Representative general election led to the establishment of the Democratic Party government. The ruling DPJ put forward a demand for a national minimum wage of 800 yen per hour, or 1,000 yen on an average. Opposition parties also called for the minimum wage to be raised to 1,000 yen per hour or more.

The Japan Business Federation (Nippon Keidanren) and small-business organizations exhibited a sense of crisis, saying, "Small- and medium-sized businesses are in a difficult financial position and a minimum wage increase is unacceptable." Zenroren has been demanding that "large corporations use a part of its internal reserves to benefit workers and small- and medium-sized enterprises." It also demanded that the minimum wage be at least 1,000 yen per hour, that a national uniform minimum wage system be established, and that the government offer assistance to small- and medium-sized businesses. Zenroren has been demanding that the government fulfill its election promise on this issue and pressing other trade unions, small-business organizations and minimum wage council members to support its demand.

Zenroren and Rodo-soken conducted a minimum cost of living survey in the Tokyo metropolitan area, several northeastern Japanese cities, and mid-sized city (Shizuoka) and found that the minimum cost of living is 230,000 yen and that the minimum wage should be at least 1,300 yen per hour in all these areas. These findings support what Zenroren has called for. They were reported by mass media and distributed at the minimum wage council meetings as reference material.

In November 2009, Rodo-soken published an "urgent proposal for resolving the economic crisis," explaining that the use of a part of internal reserves which large corporations have amassed will have a ripple effect on the economy. If the minimum wage is raised to 1,000 yen per hour, domestic demand will expand by 5.8 trillion yen, the nation's domestic production will increase by 13.4 trillion yen, and GDP will grow by 7.3 trillion yen, and the country's tax revenue will increase by 1.3 trillion yen.

These efforts repelled the financial circles' adverse winds. Shortly before the House of Councilors election in July, the three parties (government, labor and business circles) agreed to "ensure as soon as possible that the minimum wage will be 800 yen by fiscal year 2020." They also agreed that "achieving a 3 percent economic growth in nominal terms and 2 percent growth in real terms are precondition for realizing the minimum wage increase." In 2010, the minimum wage was raised by 17 yen on average, the highest being Tokyo's 821 yen per hour, and the lowest being Okinawa's 642 yen. The average increase in the minimum wage during the last four years is 57 yen (or 14 yen each year). These are the best result ever achieved.

We will go into a crucial stretch for the elimination of poverty and reducing the gap between rich and poor. Japan is called upon to ensure decent work and take on other industrialized countries in a fair competition. We have been demanding a substantial increase in the minimum wage because at present the minimum wage is lower than livelihood protection benefits. We will continue to demand that the agreement by the government, labor and employers on an effort to achieve the 800 yen minimum wage and seek to raise the national average to 1,000 yen per hour as early as possible. We continue to demand that a national uniform minimum wage system be established to ensure a minimum wage of at least 1,000 yen. The task now is to raise the minimum wage to 50 percent, and even to 60 percent of the average wage.

Regional Minimum Wages 2010
FY2010 (FY2009)
691 (678)
645 (633)
688 (676)
750 (735)
821 (791)
818 (789)
681 (669)
693 (681)
745 (732)
779 (762)
642 (630)
704 (692)
642 (631)
692 (680)
642 (629)
National weighted average
730 (713 )
Note: In Japan, the minimum wage is established in each prefecture. .


From Rodo-Soken Activities

*August 2 - Rodo-soken presented the Minimum Wage Council with opinion on setting a benchmark increase in regional minimum wages for 2010.
*August - Rodo-sokenfs panel on wages and the minim wage, published gPoints at issue, case study, and task of the movement on equal treatment in terms of wages.
*September 26-October 8 ? Rodo-soken sends a study team to France and Britain to take a close look at rules of employment and social security programs.

Japan Research Institute of Labor Movement
Rodo-Soken is a labor think tank that carries out research and studies on labor-related issues in cooperation with the National Confederation of Trade Unions (Zenroren), the national trade union center representing the class interests of the Japanese workers, in order to help advance the Japanese trade union movement theoretically as well as practically in response to the needs of the movement.

Japan Research Institute of Labor Movement
Address: Maison-Hirakawacho501, 1-9-1,Hirakawacho Chiyoda-Ku,
Tokyo, 102-0093, Japan

Tel +81-3-3230-0441 Fax +81-3-3230-0442