Corporate Attitudes with regard to Minimum Wage Revisions
48.9% of “Retail” to Revise Payroll Systems
— Recognize that Minimum Wage Revisions are not sufficient to fuel Consumption Recovery —
Between October 1 and October 20, 2016, the national minimum wage will be revised. Based on the government’s “Nippon 100 Million Total Activation Plan,” “2016 Basic Policy for Economic and Fiscal Management and Reform” (basic policy), and “Japan Revival Strategy of 2016,” and the like, the FY 2016 revision of the minimum wage raised the maximum amount for the first time since it was decided in 2002 that the minimum wage would be determined based on hourly wages, such that this amount now exceeds 700 yen in all prefectures in Japan. Therefore, while income increases are expected due to more active consumption, there are also concerns that corporate earnings will be hurt due to increased labor costs.
Therefore, Teikoku Databank conducted a survey on corporate attitudes with regard to the rise in the minimum wage. This survey was conducted in conjunction with the September 2016 TDB Trends Research.
*Survey period: September 15 – 30, 2016; Companies Surveyed: 23,710; Valid Responses: 10,292 (Response Rate: 43.4%).
*Details of this survey can be found on the dedicated Economic Trend Survey HP. (http://www.tdb-di.com).
Primary points of survey results(summary)
- 1 35.0% of companies “have revised (are considering revising)” their payroll systems as a result of the minimum wage revision. In particular, the percentage exceeds 40% among “retail,” “transportation and warehousing,” and “manufacturing” businesses, which hire a large number of non-permanent employees. On the other hand, 49.1% of companies “have not revised (are not considering revising)” their payroll systems. This number topped 40% regionally, with “Hokkaido” recording the highest percentage (43.4%), followed by “Kyushu” (40.7%) and “Chugoku” (40.2%).
- 2 The minimum hourly wage paid when employees are actually hired was about 958 yen on average overall. This exceeds the minimum wage (823 yen) by 135 yen. While the difference between the minimum wage and the minimum hourly wage at hire was largest in “Tokyo,” on a regional basis, this difference was largest in “West Japan.”
- 3 40.5% of companies felt the increase was “reasonable.” Companies that felt it was “reasonable” far outnumbered companies that felt it was “high” (11.6%) or “low” (18.1%), suggesting that the increase has generally been accepted by companies.
- 4 Most of companies (57.9%) said the increase would have “no effect” on their performance. However, while only 1.7% of companies felt the increase would have a “positive effect,” over 20% felt the increase would have a “negative effect” (21.7%).
- 5 Only 10.2% of companies felt the increase “would be” effective in recovering consumption, on the other hand, most companies were skeptical about the effect of the increase, with 53.7% indicating it “would not be” effective in recovering consumption.