A revision to the tax system in October will add ¥15 to the average minimum wage, which will climb to ¥764 an hour, the labor ministry says.
It is the largest year-on-year rise since ¥17 in fiscal 2010.
Prime Minister Shinzo Abe has urged companies to finally raise wages to help his hollow strategy for halting chronic deflation actually work. Real demand is unlikely to rise unless wages grow quickly enough to keep pace with the inflation he is trying to stoke.
The increase will lift the monthly income of workers earning minimum wage above that of people on welfare in all prefectures except Hokkaido. People on welfare ironically earn more per month than those earning the minimum wage in 11 prefectures including Hokkaido, Tokyo and Osaka. The central government is aiming to eliminate this gap in all prefectures.
The new minimum wage — which is set by each prefecture — will thus range from ¥869 in Tokyo to ¥664 in nine prefectures including Tottori, Kumamoto and Okinawa, once the tax revision takes effect on Oct. 6. The weighted average for the entire country takes into account the number of workers in each prefecture.