Redefining the minimum wage in an age of no expectations

August 18th, 2010 by Philip Brasor & Masako Tsubuku

Labor ministry poster explains life to Tokyo wage slaves

Labor ministry poster explains life to Tokyo wage slaves

One of the pledges in the Democratic Party of Japan’s 2009 manifesto was boosting the national minimum wage to ¥800-an-hour as soon as possible. As with many of the DPJ’s pledges, this one has also had a harsh reality check. Prefectural governments set their own minimum wages, which means if the central government wants to boost it for everyone it has to deal with national labor groups and associations of small and medium-sized businesses. The Minimum Wage Council did manage to increase the national minimum wage so far this year by an average of ¥15, the highest  increase ever, but the national average is still only ¥713 (from Okinawa’s ¥629 to Tokyo’s ¥791), far below the ¥800 target.

In order to understand the change, one first has to realize that the meaning of the minimum wage in today’s world has also changed. Originally, it was formulated as the first wage for new school graduates who would still live with their parents. It was the foundation for a wage structure that assumed salaries would increase with age, so that by the time a worker was in his 30s (this structure was built for men) he was earning enough money to raise a family and buy a home.

However, the 1990s economic downturn changed all that. By the end of the decade one out of every three workers was a non-regular employee whose wages remained stagnant regardless of how long they worked in the same job. As it stands now one out of every five heads-of-household in Japan earns less than ¥2 million a year. A person who works full-time, meaning 40 hours a week, for the minimum wage of ¥713 an hour earns about ¥1.5 million a year before taxes. There are currently 12 prefectures where minimum wage workers earn below what a person receiving welfare gets from the government. That, in fact, is the definition of “working poor.”

The DPJ could not reach its ¥800-an-hour target because of opposition from small and medium-sized businesses who say that any increase in the minimum wage would push them to bankruptcy. That is basically why the gap between rich and poor is increasing; not just in Japan, but in the U.S., where this gap is the widest in the industrialized world. The principle in Japan and the U.S. is that businesses must be supported for the sake of the economy as a whole, whereas in most of Europe the principle is that workers must be supported for the sake of society as a whole. In Europe, companies are expected to guarantee their workers a wage that ensures a certain standard of living. If the companies can’t do that, then they shouldn’t be in business. Of course, Europe also has high taxes and more thorough social services.

The thing is, even ¥800-an-hour is not enough to raise a family on. (The long-term DPJ plan is ¥1,000 by 2020.) A recent article in the Asahi Shimbun reported on a young man who has worked in a convenience store in Miyazaki for 13 years. He now earns ¥630 an hour, or ¥1 above Miyazaki Prefecture’s minimum wage. He works six days a week and earns ¥130,000 a month before taxes and medical insurance are subtracted. He should also be paying ¥15,000 a month for the national pension — which is uniform for non-regular employees nationwide, regardless of what they earn — but he doesn’t because he can’t afford to. Fortunately, he still lives with his parents, but he has a girlfriend whom he wants to marry. Her parents disapprove of the match, and who can blame them?

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