Japan Slows Minimum Wage Hike Amid Inflation Fears

An advisory panel to Japan's labor ministry has decided to raise the minimum wage guideline for fiscal 2026 by an average of 4.9%, or 55 yen, to 1,176 yen per hour. This increase is lower than last year's hike of 63 yen, which was the largest since the current system began in fiscal 2002.

The decision reflects a balance between alleviating workers' financial burden due to inflation and considering small and midsize firms' business conditions. Labor representatives had called for an average increase of 75 yen, citing the impact on daily life of the Middle East conflict and other factors.

Employer representatives urged restraint as surging materials prices are driving up business costs. The new wages will typically take effect from October onward, with prefectures setting their own rates based on the government's guideline.