Japan's minimum wage is set by each prefecture based on the panel's recommendation. The current nationwide average stands at 961 yen. The panel, which is made up of representatives of labor and management, and experts, decides the amount of the increase based on data such as inflation, wage hikes through the annual spring labor negotiations and the ability of businesses to pay.
The government is hoping for an average minimum hourly wage of 1,000 yen this year.
The panel's discussions for this fiscal year began last month. The fourth meeting was held on Wednesday.
The discussion lasted about nine hours, with the labor and management representatives failing to narrow their differences over the amount of the increase.
Participants said there is no dispute between the two sides over the need to raise the rate. But they say workers are calling for a drastic increase in light of rising prices, while businesses remain cautious.
The discussion to compile a recommendation was temporarily suspended, but is scheduled to resume Friday.
Global minimum wage
A survey last year by the labor ministry shows that Japan's minimum wage is the lowest among the six countries surveyed.
Britain, France, Germany and South Korea set a national minimum wage, while in the US it is set by the federal government as well as the states and cities. In many cases, the minimum wage set by the states and cities is higher than that of the federal government.
Confrontation between labor unions and businesses
Labor representatives on the panel have been calling for a significant raise in the minimum wage. They said in previous discussions that with the minimum hourly wage at the present level, workers' annual income would remain at around 2 million yen, or 14,200 dollars, even if they worked about 2,000 hours a year. They pointed out that this was low, even by global standards.
Businesses were more cautious. They expressed concern that a rise in the minimum wage would increase the burden on small- and medium-sized businesses, which support regional economies. They warned that more firms could go out of business or go bankrupt.
Government needs to support smaller firms
Professor Yamada Atsuhiro of Keio University says management teams at small companies are facing a tough situation.
He says the government's role is to support the smooth implementation of the transfer of labor costs onto prices.
Yamada says "lifting the minimum wage to 1,000 yen is important but raising it to the level that matches the rising price is important."
Yamada says continuing the hike in the minimum wage is crucial.