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The government plans to boost minimum wages in regional areas as part of efforts to address the over-concentration of people in Tokyo and ensure sustainable economic growth, officials said.

A draft of the government's annual economic and fiscal policy guidelines calls for efforts to raise minimum wages, aiming to achieve a national average of ¥1,000 per hour as early as possible while also narrowing the gap between regions.

The government is looking to continue the push for higher wages that began during the administration of Prime Minister Shinzo Abe. The guidelines call for this year's increase in minimum wages to continue at around the level of the 3% hike seen for four straight years through fiscal 2019.

The national average minimum wage in fiscal 2020, which ended in March, stood at ¥902 — lower than in the United States and many parts of Europe — which was another reason cited in the bid to raise minimum wages swiftly.

Every summer, prefectural wage councils decide their minimum wages based on recommendations from the Central Minimum Wages Council, an advisory panel to the labor minister.

Among the country's 47 prefectures in fiscal 2020, Tokyo boasts the highest minimum wage, at ¥1,013, while Akita, Tottori, Shimane, Kochi, Saga, Oita and Okinawa had the lowest, at ¥792.

The guidelines call for raising minimum wages in regional areas to encourage more people to move away from large cities. Young people are increasingly interested in moving to the countryside due to the growing prevalence of teleworking.

However, lobby groups representing small businesses suffering amid the pandemic oppose raising minimum wages, saying that "increases that exceed the realities of small businesses will cause unemployment." They call on the government to keep minimum wages unchanged for fiscal 2021.

"Raising minimum wages would send the wrong message to struggling lodging and restaurant businesses," Akio Mimura, chairman of the Japan Chamber of Commerce and Industry, told reporters last week.

One reason behind the slow rise in minimum wages is that the country has long suffered from sluggish productivity.

Japan was ranked 26th out of the 37 members of the OECD in terms of productivity per worker in 2019. The nation's productivity was less than 60% that of the United States.

"In order to create the environment for raising minimum wages, the government should first focus on policies aimed at raising the productivity of the whole economy," said Takahide Kiuchi, executive economist at Nomura Research Institute Ltd.

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