A government panel proposed Tuesday to raise the average hourly minimum wage by 14 yen to 763 yen in fiscal 2013, the largest hike in three years, with Prime Minister Shinzo Abe aiming for his economic stimulus to spill over into workers' pay.

After a 12 yen increase in the previous year through March and 17 yen in fiscal 2010, the proposed hike would solve the issue of workers under the minimum wage earning less than welfare benefits in 10 out of the 11 prefectures that currently face the problem, officials said.

Each prefecture will apply a new minimum wage around October after examining the proposal in light of economic conditions in each area, they said.