With the ruling that the Omnibus Law is unconstitutional, the demonstrations by labor unions demanding minimum wage revisions that have given momentum to the ruling, and the announcement of minimum wages that are almost in accordance with the Omnibus Law one after another, many people may be wondering what to do. Considering the current situation, let's consider some hints on how each company should adjust wages.

[Omnibus law and minimum wage setting]

The Omnibus Law was ruled unconstitutional after the minimum wage, which had previously been determined based on the minimum daily necessities amount or suitable daily necessities amount, and which resulted in repeated large raises, was changed to ``inflation rate + GDP'' and then changed to ``inflation rate or GDP'' in Cabinet Order No. 36 of 2021. This unconstitutional ruling did not invalidate Law No. 11 of 2020 (commonly known as the Omnibus Law), but recognized the unconstitutionality of the way it was enacted and stipulated that it must be revised within two years, or it will become invalid. Therefore, the Omnibus Law and Decree No. 36 of 2021 remain in effect. On the other hand, it has been prohibited to establish detailed provisions related to the Omnibus Law in the future until it is revised, meaning that provisions that require detailed provisions cannot be enforced. However, detailed regulations regarding the minimum wage have already been established in Cabinet Order No. 36 of 2021 and can be applied, so each state has successively announced the minimum wage amount calculated using a formula in accordance with the regulations. In reality, the prefecture/city wage committee appears to have agreed on a different salary increase rate than the formula in Decree No. 36 of 2021. However, the prefecture/city governor does not have the authority to set the minimum wage amount, and must make a proposal to the governor of the state where the wage is located. Although it is not clear what kind of mechanism is involved, the state governors did not follow the recommendations of the prefectural/city governors across the board, and decided on their own the numbers calculated using the formula of Cabinet Order No. 36 of 2021. There is no way of knowing what happened to the governors of each state, who up until now seemed to have approved proposals from prefectural/city governors without even considering them (?), but I think the system has become a little more trustworthy for companies.

[Wage adjustment above the minimum wage amount]

According to the Omnibus Law and Decree No. 36 of 2021, sectoral minimum wages will no longer be set from the 2021 minimum wage. And the minimum wage amount, which has been adjusted at around 1% as mentioned above, still does not exceed most of the sectoral minimum wages set for 2020. On the other hand, wage reductions due to a decrease in the applicable minimum wage amount are not permitted. Therefore, legally speaking, many companies no longer require annual salary increases. However, maintaining the standard of living and motivating employees must be considered. I think it is necessary to take measures that are more considerate of employees, such as considering salary increases based on the ``inflation rate or GDP'' or measures based on company performance. On the other hand, if you continue to increase wages at the traditional rate of ``inflation rate + GDP'', that method will become the basis of the company, so I think it is better to avoid it as much as possible. Please be careful.

Related regulations: Law No. 11 of 2020 UU-11/2020・Political Decree No. 36 of 2021 PP-36/2021