Japan has decided to raise its minimum wage by 4.9% for the fiscal year 2026 (April 2026 to March 2027). However, both the increase amount and rate are lower than the previous year for the first time in six years, resulting in a minimum wage that is now lower than South Korea's.
According to the Nihon Keizai Shimbun (Nikkei) and Kyodo News on July 29, the Central Minimum Wage Council of Japan's Ministry of Health, Labour and Welfare has set the national weighted average minimum wage for fiscal 2026 at 1,176 yen (approximately 10,409 won), an increase of 55 yen from the current hourly wage of 1,121 yen (approximately 9,922 won). The increase rate is 4.9%.
This marks the first time since the COVID-19 pandemic began in 2020 that both the increase amount and rate have fallen below the previous year's levels. Nevertheless, the 55 yen increase is the second-largest on record. Despite this, Japan's minimum wage will be lower than South Korea's next year.
Earlier, South Korea's Minimum Wage Commission decided on July 14 to raise its minimum wage for the upcoming year from 10,320 won to 10,700 won, an increase of 380 won (3.7%).
Due to the depreciation of the yen, South Korea's minimum wage has been higher than Japan's since the 2023 rate was set in 2022. Although Japan's minimum wage increased by a record 6.0% last year, surpassing South Korea's, the lower increase rate of 4.9% this year, combined with the falling value of the yen, has allowed South Korea to regain the lead.
The slowdown in Japan's minimum wage increase rate is largely attributed to the government's decision to delay the target date for achieving a national average of 1,500 yen. Former Prime Minister Shigeru Ishiba had pushed to achieve this goal by the mid-2030s, which would have required annual increases of over 7%.
However, the government led by Sanae Takaichi effectively postponed this target date to 'as early as possible in the early 2030s' in the basic economic and fiscal management policy confirmed on July 21. To reach 1,500 yen by 2030, an average annual increase of 6.0% would be needed, while achieving it by 2034 would require an average of 3.3%.
Nikkei analyzed that the postponement of the target date has eased political pressure surrounding minimum wage discussions. One committee member noted, 'The government's goal has shifted to a more realistic path,' suggesting that discussions could now focus on the cost of living for workers, general wage levels, and companies' ability to pay.
The actual minimum wage in Japan will be determined by local councils based on the central council's standards. The amounts set by local councils typically do not deviate significantly from the central council's guidelines, and the increased minimum wage will be implemented sequentially starting in October.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.