Efforts to push the minimum wage up by about 40% in just a few years could wreck a lot of smaller companies in Japan. And that just may be the point of the exercise.
“I think the significance of raising minimum wages faster than organic growth is to drive companies with low-productivity that are unable to raise wages out of business,” Shunsuke Kobayashi, chief economist at Mizuho Securities.
Prime Minister Shigeru Ishiba announced last month that the government will work to increase the average minimum hourly wage to ¥1,500 ($10.50) by the end of the decade. That's about a 7% increase every year, a pace widely seen as overly ambitious.
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