Japan’s minimum wage is 798 JPY ($6.52) per hour, lower than many other advanced countries, including the United States, and among the lowest relative to the average wage (see chart). For a country that needs consumers to boost spending to pull the economy out of 15 years of deflation and reinvigorate growth, a hike in wages across the board can go a long way.
Impact of the 3 percent policy
We find that an increase in minimum wages in Japan not only affects those who are working below or at the current minimum wage level—which is estimated around 10 percent of the working population—but it also increases average wage growth through various channels.
The article is interesting in that it addresses a critique of minimum wage: that by increasing wages, it discourages employers from hiring more people due to the increased cost associated. Within the context of Japan's current economic state (record low unemployment, record high labour shortages) the aforementioned disincentive is less likely to be present.
Bear in mind however that despite this change, it still only provides an additional "0.5% per year", which, while helpful, is not likely to solve Japan's economic woes anytime soon.
