SNA (Tokyo) — Due to rising inflation, the recent decision to hike the average minimum wage appears set to offer little or no advance to the real quality of life for low-income Japanese. This comes in spite of Prime Minister Fumio Kishida’s economic policy theme of “New Capitalism,” which is supposed to create a fairer society by enhancing the living standards of ordinary citizens.

At the beginning of last month, after rounds of negotiations between business representatives and labor unions, a subcommittee of the Ministry of Labor recommended to their minister that the average hourly minimum wage should be raised by ¥31 (US$0.21) to the level of ¥961 (US$6.64) per hour.

At first glance, it might appear to be a modest victory for Japan’s low-wage workers, especially since it represents the largest annual hike in the average minimum wage so far this century.

The term “average minimum wage” is significant, because unlike many developed nations, there is not a single national minimum wage, but rather 47 different minimum wages based on prefectures. Under the newly-agreed levels, three prefectures will actually have minimum wages above ¥1,000–Tokyo ¥1,072 (US$7.40); Kanagawa ¥1,071 (US$7.40); and Osaka ¥1,023 (US$7.06). On the other end of the scale, the minimum wage is much lower in ten rural prefectures, where it will be only ¥853 (US$5.89).

At current exchange rates, Japan–the world’s third-largest economy–does not compare favorably with G7 peers: the minimum wage in United States is 9.2% higher (US$7.25); Germany’s minimum wage is 51% higher (US$10.02), while the National Minimum Wage in the United Kingdom (for those over 23 years old) is 53% higher (US$10.19).

But leaving aside the international comparisons, the hike in Japan’s average minimum wage offers little hope of any genuine advance in spending power for the working poor.

Japan’s core consumer inflation rate reached 2.8% last month, effectively wiping out the ostensible salary gains of those offering their labor on a minimum wage. Furthermore, Takeshi Minami, chief economist at Norinchukin Research Institute, told Reuters last week that “the weak yen is importing inflation into Japan. Core consumer inflation is set to top 3% in October.”

Higher food and fuel prices are areas where consumers are likely to feel the pinch.

Even low-cost restaurant chains like McDonald’s have announced price hikes: last weekend, a Big Mac hamburger’s price was bumped up from ¥390 (US$2.69) to ¥410 (US$2.83).

Prime Minister Fumio Kishida promoted his candidacy last year to become Japan’s leader by offering a vision of “New Capitalism,” which he said would be an economic approach aiming to lift the living standards of ordinary Japanese. It is supposed to be a corrective to the excesses of Abenomics, which inflated the stock market at the cost of widening the nation’s economic inequality.

What can be safely remarked at this point is that, in his first year in office, Kishida has not yet made any progress toward delivering on his economic promises to Japan’s working poor.

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