Japan's minimum wage race heats up as businesses feel the strain

Japan's minimum wage race is heating up as businesses feel the strain. In an effort to combat the outflow of young people from regional areas, prefectures throughout Japan are competing to raise their minimum wages, with even a single yen making a difference. Akita Prefecture, which had the lowest hourly wage in the country at 951 yen ($6) per hour in fiscal year 2024, recently raised it by 80 yen to 1,031 yen.

However, this move has sparked backlash from business leaders, leading Akita's advisory council to delay implementation for six months.

The national weighted average minimum hourly wage in Japan is 1,121 yen, with regional rates ranging from 1,023 yen in prefectures like Okinawa to 1,226 yen in Tokyo. The government has recommended a 4.9 percent increase to 1,176 yen this fiscal year, which prefectural councils are expected to implement this month. Akita's increase to 1,031 yen is the third-highest rise in the country, but it has put pressure on businesses like Tomokazu Terada's supermarket chain, Marudai.

Marudai, which operates five supermarkets in Akita's capital, is already struggling with soaring labor costs. While the company is hiring store clerks at 1,050 yen or more, finding staff remains difficult. The labor shortage is severe, with some stores unable to function if even one veteran employee leaves. Marudai has raised the retirement age for part-time employees from 65 to 75 and has barely been able to hire new graduates for the past three years.

The company has also seen a rise in its annual electricity costs due to rising prices and the need to operate equipment outside business hours. Despite these challenges, Marudai experienced some relief when the implementation of the new minimum wage was delayed by about six months, resulting in cost savings of 10 million yen or more.