Japan: FY26 Minimum wage hikes: Impact on wages of full-time workers, particularly at SMEs

Research evidence excerpt

Japan: FY26 Minimum wage hikes: Impact on wages of full-time workers, particularly at SMEs

Nomura | Japan: FY26 Minimum wage hikes 30 July 2026

monthly wages has tended to be lower than growth in hourly wages, partly because

people have been reining in their working hours in order to stay below the annual income

barrier. From the perspective of increasing household purchasing power as well as easing

labor shortages, we look for benefits to employment from the income-linked benefit

system, on which a suprapartisan agreement was reached for implementation in FY29.

Another notable development is that the substantial minimum wage increases are now

affecting not only part-time employees but also regular employees, particularly at SMEs.

According to a survey by the Japan Chamber of Commerce and Industry, more than 30%

of SMEs responded to the FY25 minimum wage hike by hiking wages for full-time workers

(Figure4). It would appear that the response to minimum wage increases is contributing

to acceleration in wage growth for full-time workers in a different timeframe than before.

Fig. 1: Minimum wage hikes and increases in base pay Fig. 2: Timeframe of increases in hourly wages (for employees

near minimum wage)

Note: Figures reflect actual increases in minimum wage in each prefecture. Figures in

parentheses and for FY26 show increase in national recommendation. Note: Figures in parentheses show percentage of total workers nationwide.

Source: Nomura, based on Ministry of Health, Labour and Welfare and Rengo data Source: Nomura, based on Ministry of Health, Labour, and Welfare data

Fig. 3: Monthly Labor Survey: wage growth (same-business Fig. 4: Small and medium-sized companies that raised wages in

series) response to increase in minimum wage