Minimum Wage 9,860 Won Surpasses Even Tokyo, Japan

The National Average Minimum Wage in Japan Surpasses Last Year's Level

South Korea's minimum wage for next year has been raised by 2.5% from this year to 9,860 won per hour, surpassing the minimum wage of Tokyo, Japan. In Japan, where minimum wages vary by region, Tokyo has the highest minimum wage.

On the 20th (local time), the Japanese economic media outlet Nihon Keizai Shimbun (Nikkei) reported that South Korea's minimum wage has exceeded Tokyo's minimum wage. The minimum wage for next year, decided by the Minimum Wage Commission, is 9,860 won per hour, which converts to approximately 1,086 yen. This slightly surpasses Tokyo's current hourly minimum wage of 1,072 yen.

In Japan, minimum wages differ by region. Although Tokyo has the highest minimum wage, the national average minimum wage is currently 961 yen. South Korea has surpassed Japan in average minimum wage since last year.

Tokyo, Japan [Image source=Yonhap News]

Japan also began discussions on raising the minimum wage on the 1st of this month through the Ministry of Health, Labour and Welfare's advisory body, the "Central Minimum Wage Council." The new minimum wage will be applied starting October this year. Earlier, Japanese Prime Minister Fumio Kishida requested, "I hope discussions will aim to achieve an hourly minimum wage of 1,000 yen this year."

To achieve the "1,000 yen per hour" mentioned by Prime Minister Fumio, an increase of more than 4.1% (39 yen), the largest raise ever, would be required. However, even if the average minimum wage reaches 1,000 yen per hour, it is unlikely to catch up with South Korea's domestic minimum wage if the current exchange rate remains steady.

Meanwhile, South Korea's minimum wage based on Purchasing Power Parity (PPP) already surpassed Japan in 2021 and reached the highest level in Asia. At that time, according to the OECD's PPP-adjusted minimum wage rankings, South Korea ranked 13th with $8.8 (approximately 11,250 won). Japan was only 15th with $8 (approximately 10,228 won, 2020 figure). The top OECD ranking was held by the European city-state Luxembourg ($13.4, approximately 17,131 won).

Although South Korea's minimum wage increase rate for next year (2.5%) is relatively modest, it has been raising its minimum wage steeply compared to major countries.

According to OECD data, South Korea's minimum wage level relative to the median wage of workers rose sharply from 21st place in 2017 to 12th place in 2021, climbing 9 ranks. The minimum wage level relative to the average wage also rose 11 ranks, from 20th place in 2017 to 9th place in 2021.