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Japan
Intelligence for Better Decision Making
Japan minimum wage rise
July 26, 2024 | Government Actions- On July 24, a subcommittee of the Central Minimum Wage Council in Japan agreed to increase the minimum wage by 50 yen, marking the largest increase ever. This decision sets the new hourly wage at 1,054 yen in eight prefectures, in response to rising prices.
- The Council includes labor and management representatives and determines the minimum wage based on various factors such as current wage levels and inflation rates. The hike was anticipated, with discussions focusing on specifics rather than the necessity of an increase.
- The current national average minimum wage stands at 1,004 yen per hour. Significant increases in the minimum wage support workers but impose a heavy burden on small and medium-sized enterprises (SMEs) due to rising labor costs. Many SMEs with weak management foundations are experiencing "bankruptcies due to labor shortages."
- Concerns are growing that bankruptcy cases among SMEs will sharply increase in the future. The national weighted average hourly minimum wage has risen from 823 yen in fiscal 2016 to over 1,004 yen last year, with increases of more than 3% each year since, except for fiscal 2020 during the pandemic.
- A subcommittee of the Central Minimum Wage Council set a guideline to raise the minimum wage by 50 yen (5%) in fiscal 2024, leading to a national weighted average of 1,054 yen, up from the current 1,004 yen.
- Discussions considered price trends for electricity, gas, and necessities. Prefectural councils will now determine local minimum wages based on this guideline. Last year saw unusual raises in some prefectures due to labor shortages, and similar dynamics are expected this year.
- The new minimum wage will come into effect in October; applicable to all workers including part-timers and casual employees. Failure to pay the minimum wage can result in fines for companies and managers.
- The council categorizes prefectures into three groups: A, B, and C, based on economic conditions. Group A includes six prefectures like Tokyo, group B covers 28 prefectures such as Tochigi, and group C comprises 13 prefectures including Iwate.
- Prime Minister Fumio Kishida aims to reach a minimum wage of 1,500 yen by the mid-2030s. There are concerns that even with full-time work, an annual income of about 2 million yen remains inadequate for a decent living, leading to the "working poor" situation.
- The management sector raised concerns about the inability to pass higher labor and material costs to consumers, making it challenging to secure funds for higher wages. Labor representatives highlighted regional disparities, noting the migration of workers from low-wage rural areas to urban centers.
- The Japanese government panel has proposed a record minimum wage increase of 50 yen for fiscal 2024, aiming to raise the national average to 1,054 yen per hour, a 5.0% increase from the current rate of 1,004 yen.
- A survey by the Japanese Trade Union Confederation indicated wage increases from this year's spring labor-management talks averaged 5.1%.
- Real wages in Japan fell by 1.4 percent in May, marking 26 consecutive months of decline. The government aims to increase the minimum wage to 1,500 yen by the mid-2030s.
- The revised minimum wage typically takes effect in October following recommendations from a government panel.
Japan's population falls
July 26, 2024 | Indirect Indicator- The population of Japanese nationals decreased by 861,000 in 2023, reaching 121,561,801, marking the largest drop since 1968 and the 15th consecutive year of decline.
- The trend is attributed to a declining birthrate, with a record low of 730,000 births compared to 1.58 million deaths.
- As of January 1, 2024, Japan's total population, including foreign residents, was 124,885,175, down by approximately 532,000.
- Foreign residents surpassed 3 million for the first time, with growth seen in all prefectures.
- Tokyo experienced a slight increase in its Japanese population.
- The largest population decreases were in Akita, Aomori, and Iwate prefectures.
- The foreign population rose by 329,535, largely due to the easing of COVID-19 border controls.
- Around 85% of foreign residents are of working age, contributing to the labor market.
- The senior population (aged 65 and over) constituted 29.38% of the Japanese population.
- The working-age population (aged 15 to 64) slightly declined to 59.02%.
- Younger Japanese show reluctance to marry or have children, influenced by poor job prospects, rising living costs, and a gender-biased corporate culture impacting women and working mothers.
- In response, the government allocated 5.3 trillion yen ($34 billion) in the 2024 budget for incentives to encourage childbearing.
- The government plans to spend 3.6 trillion yen ($23 billion) annually over the next three years on childbearing incentives.
- The measures primarily target married couples and do not address the increasing number of young individuals hesitant to marry.
- Japan's population is projected to drop by about 30% to 87 million by 2070, with four out of ten individuals over 65 years old.
Monitored Intelligence for Japan - Jan. 25, 2024
News
Media
502
Government
Releases
96
City/State
Releases
120
Embassy
Releases
2
Foreign
Service
Advisories
0
Service
Advisories
0
Academic/
Think
Tank
24
Think
Tank
24
Podcasts
0
Videos
0
Social
Media
0
Business
Releases
4
Erudite Risk takes an all risks approach to intelligence reporting. We categorize key intelligence into one of 40 different risk intelligence categories.
The goal is to provide intelligence that allows decision makers to avoid being blindsided by what they may have missed, while informing them to make better decisions as well.
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Erudite Risk also includes operations categories so you can monitor the environment for better decision making. Everything is tied together--what happens in risk affects operations and what happens in the market impacts risk profiles.
We categorize key intelligence into one of 30 different operations intelligence categories.
Different roles and functions within the organization can monitor different key issue areas. HR may monitor employment, wages, regulations, labor and management relations, etc., while P&L leaders may monitor overall developing trends.
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6
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1
Japan's Honda to close China plant, halt production at another factory
Japan Times | English | News | July 26, 2024 | Supply Chain Issues
Honda Motor will close a factory in China and halt production at another as it shifts focus to electric vehicle production amid intense competition from Chinese brands. The closure involves a plant operated in a joint venture with Guangzhou Automobile Group, set for October, which has produced the Accord sedan and has an annual capacity of 50,000 vehicles. Production will also pause at a separate joint venture factory with Dongfeng starting in November, which has a capacity of 240,000 vehicles. These changes will reduce Honda's annual production capacity in China to 1.2 million vehicles from 1.49 million, with plans to increase it back to 1.44 million by launching two new EV plants currently under construction. The company is responding to challenging market conditions as domestic automakers gain traction with cost-effective vehicles. Honda and Nissan are considering a strategic partnership for EV components and automotive software collaboration.
Japan's population declines for 15th consecutive year
NHK | English | News | July 26, 2024 | Demographics
Japan's population has declined for the 15th consecutive year, with the Internal Affairs Ministry reporting a population of just over 124.885 million as of January 1, a decrease of approximately 531,700, or 0.42 percent, from the previous year. The largest populations are in Tokyo (about 13.9 million), Kanagawa (9.2 million), Osaka (8.7 million), and Aichi (7.5 million). Conversely, Tottori Prefecture has the smallest population at around 540,200. Population growth was observed only in Tokyo, Okinawa, and Chiba, while 44 other prefectures experienced declines. The number of Japanese residents decreased to over 121.561 million, marking the largest year-on-year decline since 1968. The number of births fell to about 729,300, the lowest since 1979, and deaths rose to over 1.579 million, leading to a record natural population decline of 850,360. In contrast, the number of foreign residents reached over 3.323 million, an increase of about 329,500, or 11.01 percent, marking the largest increase in both number and rate.
Netanyahu seeks more US military support in Congress speech
NHK | English | News | July 26, 2024 | Geopolitical Conflict and Disputes
Israeli Prime Minister Benjamin Netanyahu addressed Congress, seeking increased US military support to combat Hamas amid rising civilian casualties in Gaza and growing criticism of his government. During his first US visit since the conflict began in October, he stated that the war could end if Hamas surrenders but that Israel would continue fighting to eliminate Hamas' military capabilities and bring hostages home. Netanyahu urged for expedited US military aid to help end the conflict and prevent broader regional war, quoting Winston Churchill on the need for support. He clarified that Israel does not intend to resettle Gaza but must maintain security control while allowing Palestinian civilian governance. The death toll in Gaza has reached 39,145. Netanyahu received a warm welcome, yet some Democrats criticized him, including booing when he remarked on protests in the US. Protests outside the Capitol featured thousands demanding a ceasefire and an end to military aid, with signs accusing Congress of complicity in war crimes. Notable absences from the speech included Vice President Kamala Harris and several Democratic lawmakers.
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