A government panel proposed Wednesday that the average hourly minimum wage in Japan should be raised to 901 yen in fiscal 2019, exceeding 900 yen for the first time ever as the consumption tax will be increased in October.

In its guideline on minimum wages, the labor ministry's advisory panel said the average wage needs to be raised by 27 yen from the previous year -- the largest increase since fiscal 2002 when it started using an hourly wage to propose a rough target for hikes.

While minimum wages in Tokyo and Kanagawa will exceed 1,000 yen under the proposal, those in 17 prefectures will remain on the 700 yen level, underlining the gap between metropolitan and rural areas.

Currently, hourly minimum wages are decided by the ministry's regional bureaus in each of Japan's 47 prefectures, taking into account the local economic situation.

Following the proposal submitted by the central government's advisory panel, local panels in each prefecture will recommend revised minimum wages by August. The new minimum hourly wages will be adopted around October.

Although labor unions aiming to boost the income of workers and management seeking to avoid rises in personnel costs clashed in negotiations, the two sides managed to agree on the wage hike, taking into consideration the planned 2-percentage-point tax hike and a labor shortage on the back of Japan's rapidly aging population.

The size of the wage increase was 25 yen in both fiscal 2016 and fiscal 2017 and 26 yen in fiscal 2018. With the proposed hike of 27 yen in fiscal 2019, or 3.1 percent, the average minimum wage will likely post around a 3 percent increase for the fourth consecutive year.

Source: ANNnewsCH