Answer to Question #98345 in Macroeconomics for annie

Question

Assume Japanese government wanted to keep the labor costs in the aggricultural sector low. At the same time however the government wanted to increase the wage level and improve working conditions of Japanese workers. How can Japan achieve these two seemingly contradicting aims?

Answer 1

It is the question of minimum wages.

if the government increases the minimum wage, then increase the wage level and improve working conditions of Japanese workers, and at the same time, relative to other sectors of the population, labor costs in the aggricultural sector low.

Minimum wages are determined — on a dimension apart from economic principles — by calculating what pay is needed for workers to earn the minimum essential income to cover expenses. In short, this belongs in the realm of social security policy. However, some people are calling for minimum wage hikes to facilitate industrial and business metabolism through greater competition. But one should beef up the competition policy to expedite the industrial metabolism instead of resorting to minimum wage hikes.

Minimum wages necessary from the viewpoint of social security must be secured. But policy systems should be as simple as possible. The adoption of a social security policy for the purpose of a competition policy must be avoided.

https://www.japantimes.co.jp/opinion/2019/10/31/commentary/japan-commentary/questions-raising-minimum-wages/#.Xc2lblczbIU