TOKYO, July 31 (Xinhua) -- A panel comprised of representatives from Japan's labor ministry on Wednesday backed a proposal submitted by the central government's advisory panel to raise the minimum hourly wage in Japan to an average of 901 yen (8.30 U.S. dollars) in fiscal 2019, above the 900 yen mark for the first time.
The move comes ahead of a planned consumption tax hike here in October from 8 percent to 10 percent. Economists have warned the tax hike could lead to waning domestic demand, with households and consumers tightening their purse strings, which could see Japan plunge into recession again as was the case with the previous consumption tax hike.
The hourly wage hike of 27 yen will mark the largest since the labor ministry's advisory panel began using wage figures based on hourly work to formulate pay hikes since fiscal 2002.
The increase has been approved in line with an agreement between unions and management, alongside the labor ministry.
The hike will still see hourly wage disparities between large prefectures and rural areas, however, with minimum hourly wages in Tokyo rising above the 1,000 yen mark (9.21 U.S. dollars), compared to 17 other prefectures across the country, where hourly wages will be around the 700 yen (6.45 U.S. dollars) mark.
Due to the disparity, some regional economies have seen their workforce hollowed out, as workers seeking higher earnings have flocked to bigger economic hubs, resulting in local economies contracting.
Local municipalities, henceforth, based on the new marker for hourly wage hikes will be able to decide their own minimum hourly rate, with the government aiming for an average minimum hourly wage to be 1,000 yen (9.21 U.S. dollars) at the earliest juncture possible.
