When weighing a factory location in Japan against Vietnam, investors usually start their labour-cost math from a deceptively simple figure: the minimum wage. Yet the two countries run their wage floors on entirely different philosophies — Japan operates 47 prefectural floors, Vietnam just four regional ones. Understanding each adjustment mechanism helps companies forecast payroll budgets years ahead instead of reacting to each new decree.
Japan: 47 prefectural floors, revised once a year
The framework is the Minimum Wage Act. It works in two layers: every summer, a subcommittee of the Central Minimum Wages Council publishes recommended increases (guidelines) for three groups of prefectures based on economic conditions; then each of the 47 prefectural minimum wage councils fixes its own exact figure. New rates typically take effect around October each year.
On top of regional floors, Japan maintains “special minimum wages” for industries such as steel and automobiles — where they apply, the higher rate prevails and the regional floor cannot be used instead.
The latest revision (fiscal 2025): the national weighted average reached 1,121 yen per hour, up 63 yen — the largest increase since hourly indication began. Tokyo tops the ranking at 1,226 yen, followed by Kanagawa at 1,225 yen; the lowest are Kochi, Miyazaki and Okinawa at 1,023 yen. For the first time, all 47 prefectures cleared the 1,000-yen mark. The government targets a national average of 1,500 yen per hour by the end of the decade.
Vietnam: four regions by locality, set by government decree
The Labour Code 2019 lays the foundation in Article 90: employee wages must not fall below the minimum wage. Article 92 tasks the National Wage Council — representing employees, employers and the State — with studying and recommending minimum wage levels for the Government to decide by decree.
The current instrument is Decree 293/2025/ND-CP (issued 10 November 2025, effective 1 January 2026, replacing Decree 74/2024/ND-CP). The four new floors:
- Region I: VND 5,310,000/month (VND 25,500/hour) — up VND 350,000;
- Region II: VND 4,730,000/month (VND 22,700/hour) — up VND 320,000;
- Region III: VND 4,140,000/month (VND 20,000/hour) — up VND 280,000;
- Region IV: VND 3,700,000/month (VND 17,800/hour) — up VND 250,000.
The average increase is about 7.2%. Notably, the State left the minimum wage unchanged in 2025, so the 2026 hike partly “catches up” after a frozen year. The floor follows the locality where the employer operates; an industrial park spanning areas with different floors applies the highest one.
Side by side: what investors should read from the two mechanisms
Number of floors: Japan’s 47 rates track local living costs closely but complicate multi-prefecture expansion; Vietnam’s four regions are far simpler for group-level payroll management.
Unit of measurement: Japan prices the floor by the hour — convenient for part-time and overtime work; Vietnam sets monthly and hourly floors in parallel, so monthly-paid employers must convert to check compliance.
Revision rhythm: both countries revise almost every year, but the timing differs — October in Japan, January in Vietnam. Companies operating in both should run two separate budget-review milestones.
Latest pace of increase: Japan +6.3% (a record), Vietnam +7.2% after a frozen year. The shared trend: both are in a fast-rising cycle driven by labour shortages and living-cost pressure.
Budget impact: for a 1,000-worker plant on the Region I floor in Vietnam, the 2026 hike adds VND 350 million per month — about VND 4.2 billion a year, before wage-linked insurance contributions. In Japan, the 63-yen hourly rise equals roughly 10 million yen a month for 1,000 full-time workers. The absolute figures differ enormously, but the forecasting logic is identical: anchor the three-year plan on the annual revision calendar.
Practical recommendations
First, build the minimum wage calendar into budgeting: track the National Wage Council’s year-end recommendation (Vietnam) and the central council’s summer guideline (Japan). Second, when choosing a domestic location, look beyond the current floor to the five-year growth rate — a fast-rising prefecture or region today can reorder the cost ranking within three years. Third, the Japanese-law points in this article are a high-level framework only; before signing an investment decision, engage local counsel to review the specific compliance obligations.
Frequently asked questions
Who decides Japan’s minimum wage?
The Central Minimum Wages Council issues recommended increases in summer; then the 47 prefectural councils set their own exact figures. New rates typically take effect around October each year.
Is the gap between Japanese prefectures large?
Yes. Tokyo is highest at 1,226 yen per hour while Kochi, Miyazaki and Okinawa are lowest at 1,023 yen — a gap of about 20%. Some industries also have special floors above the regional rate.
On what cycle does Vietnam revise its minimum wage?
There is no fixed statutory cycle. In practice, the National Wage Council (Article 92, Labour Code 2019) recommends and the Government issues a decree almost every year — 2025 being the exception with no change. Decree 293/2025/ND-CP takes effect on 1 January 2026.
How much extra payroll does a 1,000-worker Region I plant face from 2026?
The Region I floor rises by VND 350,000 per worker per month — an extra VND 350 million a month for 1,000 workers, about VND 4.2 billion a year, before wage-linked mandatory insurance.
Does Japan’s minimum wage apply to foreign technical trainees?
Yes. The floor covers everyone working in Japan, including technical intern trainees and part-timers. Employers paying below the floor can face action from the Labour Standards Inspection Office.
For detailed advice on labour costs and compliance in Japan or Vietnam, companies may contact FLAT Law Firm.
This article has been quality-reviewed by the FLAW AI Legal Council