[Japan] Impact of COVID-19 hurting PM’s higher minimum wage push

Japanese Prime Minister Yoshihide Suga's plan to boost the minimum wage is facing strong opposition from the country's small and midsize firms, concerned about surviving COVID-19, and from lawmakers in his own party fearing a political backlash, Straits Times reports.

In March Mr Suga said the government intends to bring Japan's minimum wage - which is among the lowest in the G7 economies - to 1,000 yen (S$12.30) an hour from 902 yen "more quickly".

According to government sources, the prime minister believes the increase would help support households hit by COVID-19, boost competitiveness and spur inflation.

However smaller firms - employers of seven out of ten workers in Japan - have lobbied to scrap the plans.

Some of Mr Suga's own Liberal Democratic Party (LDP) lawmakers are also pushing back, believing that they could lose support from business owners in an election year, government and party sources said.

An official at the Japan Chamber of Commerce and Industry said that the heads of three lobby groups representing small firms held a rare joint press conference earlier this month to express their opposition to the minimum wage increase and wrote jointly to government and ruling party officials urging against the move.

On condition of anonymity, the official told Reuters, "The joint action was unprecedented, which was made to express the collective opinion of small firms."

Akio Mimura - head of the same business group - reportedly told the news conference this month that the tourism and restaurant industries were facing a tough time this year in comparison to 2020.

"I hear many voices of anxiety from small firms across the country," Mr Mimura said.

Japanese policymakers have long considered wage hikes a valuable tool to boost consumer spending and fuel inflation. In theory, higher minimum wages could also win political support by boosting people's purchasing power.

Shunsuke Mutai is part of a small minority of LDP lawmakers seeking minimum wage hikes across the board. He said, "The quickest way out of deflation is to raise minimum wages and boost workers' income as part of a reflationary policy." However, he said some fellow lawmakers are "urging us to think twice about calling for minimum wage hikes".

"They say voters won't support us because we are antagonising small firms," Mr Mutai added.

Japanese Prime Minister Yoshihide Suga's plan to boost the minimum wage is facing strong opposition from the country's small and midsize firms, concerned about surviving COVID-19, and from lawmakers in his own party fearing a political backlash, Straits Times reports.

In March Mr Suga said the government intends to bring Japan's minimum wage - which is among the lowest in the G7 economies - to 1,000 yen (S$12.30) an hour from 902 yen "more quickly".

According to government sources, the prime minister believes the increase would help support households hit by COVID-19, boost competitiveness and spur inflation.

However smaller firms - employers of seven out of ten workers in Japan - have lobbied to scrap the plans.

Some of Mr Suga's own Liberal Democratic Party (LDP) lawmakers are also pushing back, believing that they could lose support from business owners in an election year, government and party sources said.

An official at the Japan Chamber of Commerce and Industry said that the heads of three lobby groups representing small firms held a rare joint press conference earlier this month to express their opposition to the minimum wage increase and wrote jointly to government and ruling party officials urging against the move.

On condition of anonymity, the official told Reuters, "The joint action was unprecedented, which was made to express the collective opinion of small firms."

Akio Mimura - head of the same business group - reportedly told the news conference this month that the tourism and restaurant industries were facing a tough time this year in comparison to 2020.

"I hear many voices of anxiety from small firms across the country," Mr Mimura said.

Japanese policymakers have long considered wage hikes a valuable tool to boost consumer spending and fuel inflation. In theory, higher minimum wages could also win political support by boosting people's purchasing power.

Shunsuke Mutai is part of a small minority of LDP lawmakers seeking minimum wage hikes across the board. He said, "The quickest way out of deflation is to raise minimum wages and boost workers' income as part of a reflationary policy." However, he said some fellow lawmakers are "urging us to think twice about calling for minimum wage hikes".

"They say voters won't support us because we are antagonising small firms," Mr Mutai added.