Minimum Wage in Japan: What You Need to Know in 2024

Japan attracts many foreigners for various reasons, with promising business and career prospects often topping the list. 

After all, the country houses one of the largest economies in the world and has been a prominent figure in technological innovation. As such, it offers significant potential for professional growth and development across various industries.

If you’re considering a move to Japan for work, understanding Japan minimum wage should be your priority. So, let’s explore how the minimum wage aligns with Japan’s reputation for offering good career prospects and how it compares to other countries. 

To fully understand how Japan's residents perceive the minimum wage today, let's first discuss the current and past discourse regarding the system.

Japan Minimum Wage System, Explained

With the exceptional yet inevitable global inflation affecting economies worldwide, Japan has been on a mission to raise the minimum wage. That said, it’s important to understand two key aspects of Japan’s minimum wage system:

1. There are two types of minimum wages in Japan: regional and industrial

2. The exact amount of the minimum wage depends on each prefecture

This means that the government may take central initiatives to improve the minimum wage in the country, but each prefecture and industry then has to follow suit. This process entails careful calculations and consideration to come up with numbers that won’t break the economy while still matching the targets set by the central government.

This is the current minimum wage system in Japan and it’s based on the council method and the collective agreement extension method, two pillars that were established in the 1968 revision to the Minimum Wage Act. 

However, until 2007, despite the system's foundation being laid out in 1968, there was a disconnect between the decided figures and the actual economic situation of the public. The 2007 revision addressed this by placing the minimum wage numbers decided by the prefectures themselves at the core of the system, improving the previously stagnant approach.

Since then, things have improved quite a bit, and the government is even breaking records with the increase rates they’ve announced lately.

Record Hike in Minimum Wage By The Government This Year

In July 2024, the Japanese Labor Ministry decided to raise the average national minimum wage – a development that has made waves in the media.

The ministry’s decision is to raise the national average to an hourly 1,055 yen, representing a substantial 5% increase. 

This is, by far, the largest ever increase in the country’s minimum wage history, and very necessary considering the global inflation. 

Before this decision was made, the wage growth in the country had been unable to match the inflation rates for the past 26 consecutive months. What’s more, the low value of the yen was becoming a serious burden on the country’s international trade sector, lowering the people’s ability to buy imported goods.

Though it put pressure on smaller businesses, the new minimum wage came into effect in October 2024. Local minimum wage councils as well as private businesses had to sort things out rather quickly to meet this deadline.

Here’s the current state of minimum wages in Japan as of October 2024.

What Is The Minimum Wage in Japan Today?

As I mentioned, according to the current minimum wage system, the minimum wage for each region is decided by the local council. 

The council decides this based on the current status of the regional economy and any concerns that may arise from specific industries, all while trying to reach the government's target goal. 

Therefore, each prefecture has a different minimum wage. As of October 2024, new minimum wages are going into effect in Japan, and the average is being raised from 1,004 yen to 1,055 yen. 

According to the previous year’s number, the lowest minimum wage was in Iwate Prefecture (893 yen/hour) and the highest was in Tokyo Prefecture (1,113 yen). 

The recent 5% change will bring Tokyo's highest minimum wage to 1,163 yen per hour. Most other areas with larger business activity, such as Osaka, Kyoto, and Kanagawa, exceed the 1,000 yen mark, and all prefectures seem to have passed the 950 yen mark now.

So, what does this increase mean in terms of the country's economic position on an international scale? Does it mean that career prospects are better than ever in Japan?

Let’s see how Japan’s minimum wage compares to other countries today.

How Does Japan’s Minimum Wage Fare Against Other Countries?

The highest minimum wage in Japan, which is in Tokyo, is only about 7,60 USD per hour. Compared to the US, this isn’t impressive. 

If we consider New York as Tokyo’s equal in this comparison, Tokyo’s 7,60 dollars seems considerably low against New York’s 16.00 USD per hour minimum wage.

What’s more, the “7,60 USD” Tokyo boasts is only slightly above the United States’ national standard minimum wage of 7,25 dollars.

It’s not just the United States either. Australia’s minimum wage is currently about 15,70 USD (24,10 AUD). It’s not so different in the European Union. Germany has an hourly minimum wage of 13.61 USD (12.41 Euro), and it’s 14,38 USD (13.27 Euro) in the Netherlands. 

Considering all this, Japan still has room for improvement, but luckily, the government has plans for the upcoming years to change this scenario drastically. Let’s talk about it.

The Future of Japan Minimum Wage 

So far, our focal point has been the 50 yen increase in the minimum wage in 2024. However, the Japanese government plans to improve the minimum wage further.

In fact, this “record hike” in the minimum wage is only part of a broader plan that is expected to span the next nine to ten years. 

In 2023, during Prime Minister Kishida’s term, the government announced plans to raise the average minimum wage in Japan to 1,500 yen by the mid-2030s, which is quite an ambitious goal.

However, an even bigger goal has been set by Japan’s newly appointed Prime Minister Ishiba, who believes Japan can achieve this goal by the end of 2029. 

As concerns arise as to how realistic this goal really is, it’s important to note that the government has also reiterated its unwillingness to let small businesses bleed out in the process.

Japan’s Chief Cabinet Secretary Hasahi stated that the government will do its best to support local small businesses through cost-saving measures and further improvements in business-related regulations to suspend the impact of the minimum wage hike.

In February, the Tokyo Chamber of Commerce revealed that nearly 70% of companies reported that the current minimum wages were negatively impacting their businesses. 

So, while Chief Cabinet Secretary’s statement does come as a relief for local, small-scale enterprises for now, it’s still unclear how businesses will recuperate in the coming years considering the government’s “minimum 1,500 yen/hour” goal.

Final Word on Minimum Wage in Japan

The sudden jump in the minimum wage in Japan and the government’s plans for the future seem to have boosted workers’ morale, at least for now. 

If all goes according to the government’s plan, the current less-than-ideal salary situation in Japan may be approaching a turning point. 

As we've seen, Japan's average minimum wage isn't particularly competitive compared to other countries. However, it's important for foreigners to look beyond these average figures. 

Given that foreign skilled workers constitute a small percentage of the population, macro-level statistics may not accurately reflect individual opportunities, especially for engineers or skilled tech workers.

So, if you’re a developer or an engineer, don’t let the averages and the minimums hold you back. Foreign engineers in Japan often find themselves in a unique and advantageous position in the job market, as you’ll read in our post about developer and engineer salaries in Japan.