In this article, we breakdown the current hourly wage in Japan by prefecture for 2019 and the projected minimum wage increase for the 2019 fiscal year.
As reported on JapanToday, on July 31st, a government panel proposed that the average hourly minimum wage should be raised to ¥901, for the first time ever. This is in line with the consumption tax increase, from 8% to 10%, that will go into effect in October.
For more on the consumption tax increase, please see: Getting ready for the Japanese consumption tax increase to 10%: Here’s what you need to know. The new minimum hourly wages will be adopted around October.
What is the minimum wage in Japan?
The current nationwide average hourly minimum wage in Japan is ¥874 ($8.20 @ ¥107 to the USD).
On July 31st, 2019, a government panel proposed increasing the minimum wage to ¥901, on average, exceeding the ¥900 mark for the first time ever. This would be an increase of about 3.1%.
How do the prefectures rank in terms of minimum wage?
The hourly minimum wage is decided by the Ministry of Labor’s regional bureaus in each of Japan’s 47 prefectures. The regional bureaus set the minimum wage based on local economic conditions, but also take into consideration the annual recommendation from the Ministry of Labor’s advisory committee.
- Tokyo has the highest minimum wage at ¥985.
The Top 10 Ranking is as follows:
- Tokyo: ¥985
- Osaka: ¥936
- Saitama: ¥898
- Aichi: ¥898
- Chiba: ¥895
- Kyoto: ¥882
- Hyogo: ¥871
- Shizuoka: ¥858
- Mie: ¥846
- Hiroshima: ¥844
Minimum wage disparity among prefectures: Urban – Rural Gap
The charts below show the full ranking of the current minimum wage levels in the 47 prefectures.
- The nationwide average minimum wage is about 12.7% lower than the minimum wage in Tokyo.
- There is a major wage gap between urban and rural prefectures, but even Osaka (ranked 3rd) is about 5.2% below Tokyo.
- Also note the minimum wage difference (about 10%) between Saitama and Chiba compared to Tokyo. This is despite Chiba and Saitama prefectures often being considered part of the Greater Tokyo area in many discussions of economic activity, including residential real estate.
- Thirty-one (31) prefectures have a minimum wage that is at least 20% lower than the minimum wage in Tokyo.
- Thirteen (13) prefectures, concentrated in northern and southern Japan, have a minimum wage that is at least 29% lower than the minimum wage in Tokyo.
- Wage disparity, along with the lack of economic opportunity in general, has been a factor behind the migration of people to urban areas in search of jobs. This has led to a hollowing out of local economies and and contributed to de-population of outlying prefectures. Please see this article for more on how this affects the real estate market in Tokyo: Tokyo’s growing population and what it means for renters and investors
Please see the charts below for our calculation of the wage gap between prefectures.
What is the proposed wage increase for each of the prefectures?
The Ministry of Labor’s advisory panel proposed wage increases of between ¥26 and ¥28 per hour, on average for each of the prefectures.
For the first time, the hourly minimum wage in Tokyo and Kanagawa (which will receive increases of 2.8%) will rise above ¥1,000.
The prefecture with the lowest minimum wage, even after the proposed increase, will remain the same. The minimum wage in Kagoshima will be ¥787, about 28.7% lower than the new minimum wage in Tokyo (but a slight improvement on the 29.4% gap prior to the increase).
Nationwide, the minimum wage gap will also decrease negligibly from 12.7% to 12.4%.
The national ranking of prefectures by minimum wage will not change as a result of the increase, but every prefecture except Tokyo and Kanagawa will receive at least a 3.0% increase, with the bottom 17 prefectures receiving a 3.4% increase. As described above for Kagoshima, this will slightly narrow the gap with Tokyo compared to the pre-increase number.
Please see the charts below for our analysis of the proposed minimum wage change, by prefecture.
Cost of Living in Japan by Region
Please see this article: Cost of Living in Japan for a break down of the regional differences in living expenses.
You may also be interested in: Average salary in Tokyo
Lead photo: Stock photo via Limo.com