Minimum Wage in Tokyo, Explained
Tokyo’s minimum wage keeps increasing, and other prefectures follow suit. Do you know how much you have to be paid in Japan?
Minimum wage in Japan
Minimum wage is not the same for the whole country. The rate is on a regional basis in cooperation between the Ministry of Health, Labor, Welfare and each prefecture. The prefectures are ranked based on factors like economic performance and the span for their minimum wage is set accordingly. As such minimum wage typically mirrors living expenses in each region.
As an hourly rate minimum wage has been around since 2002. Before, a daily minimum wage was the standard in Japan. Currently, the national average for minimum hourly salary lies at 874 Yen (February 2019), with the lowest minimum wage in places like Okinawa at 762 Yen per hour.
Minimum wage in Tokyo
The capital and heart of Japan’s economy, a hub for tourists and not surprisingly the city with the highest living expenses in the country. The minimum wage in Tokyo keeps up with all that buzz and is set at 985 Yen per hour, the highest rate in the country.
Despite this high amount, hourly pay for part-time positions in urban areas, including Tokyo, but also Osaka and Nagoya averages more than 1000 Yen per hour, already exceeding the bottom line set by the minimum wage.
Overtime pay and minimum wage
Minimum wage labor is protected by the same labor laws as others. Part-time workers are eligible for overtime pay just as anyone else.
The same is true for a percental increase of your salary for time worked late at night, between 10pm and 5am. You may have noticed that many shops advertise higher salaries for their night shift. The standard rate in this case is an extra 25%.
Who earns minimum wage in Japan
Minimum wage is a security net for employees all over Japan, regardless of the industry or the hours they work. While most companies pay well above this minimum rate, minimum wage can be found for jobs like convenience store staff, factory workers, and newspaper delivery among others.
Most of these places are typical part-time jobs, but positions with limited contracts or some full-time positions can also fall in this wage level.
Minimum wage by Industry
While the minimum wage is set for each prefecture, rates can vary for specific industries. Again, the decision which industries are subject to different minimum wage regulations is made on the prefectural and not the national level.
Industries typically included are the steel industry, electrical parts makers, but also the textile industry or retail are sometimes included in these exceptions.
Minimum wage development
Over the past years, the minimum wage has increased continuously in all prefectures across Japan. Every year, it is adjusted based on economic and political grounds. Just in 2018, minimum wage was raised by 3% for the third time and a record of 26 Yen.
The goal of the Japanese government is to push the minimum wage above 1000 Yen per hour in the national average. At the current rate, Tokyo could hit that mark before the Olympic Games in 2020.
This increasing minimum wage doesn’t only help Japanese temp staff and part-time workers. It also benefits foreigners living in Japan, making it easier especially for students to support themselves during their stay in Japan.
Downsides to minimum wage?
What is great for the employees is hitting small and mid-scale companies hard. Personnel expenses are at the highest level in over 15 years.
In the past companies turned to hiring more part-time or other non-regular workers to cut costs on pay and benefits. But Japan’s labor shortage is creating an environment with more competitive salaries even for part-time workers. Minimum wage is bolstering this process where this “cheap labor” becomes increasingly expensive.
Many companies try to stay competitive by implementing labor-saving and cost-cutting strategies, with some companies now turning to raise prices. In consequence, increased labor cost may impact consumers in the form of higher product prices.
In the grand scheme of things though, this combination of rising minimum wage and labor shortage, means that work is compensated more appropriately. For us non-Japanese it becomes easier to find work in Japan, and better improved working conditions to boot. A win-win.