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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