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Japan Inc delivers largest wage increases in decades
Worker pay has been one casualty of the years of sputtering growth in the world's third-largest economy since the late 1990s, leaving Japanese salaries well behind the OECD average.
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A general view of a street in Hachioji, located in the western portion of the greater Tokyo Metropolis, as it snows in Japan's capital on February 10, 2023. (AFP/Philip Fong)
T
op Japanese companies offered their largest pay increases in a quarter century on Wednesday as the outcome of annual labor talks showed them heeding, at least for now, Prime Minister Fumio Kishida's calls for higher wages to counter inflation.
Worker pay has been one casualty of the years of sputtering growth in the world's third-largest economy since the late 1990s, leaving Japanese salaries well behind the OECD average.
But now the weak yen and rising commodities prices are driving up import costs and have pushed inflation to its highest in four decades, prompting Kishida to beat the drum for better pay.
It remains to be seen whether the higher wage trend will be sustainable, let alone create the "virtuous cycle" of stronger economic growth and 2 percent inflation long sought by Japan's central bank.
It also remains unclear whether the wave of wage hikes will spread to smaller firms that employ seven out of 10 workers in Japan but often struggle to pass on costs to their bigger customers.
Big companies are expected to raise wages by around 2.85 percent at the shunto spring wage talks that wrap up on Wednesday, according to a survey of 33 economists taken by Japan Economic Research Center (JERC).
That's far above last year's 2.2 percent and the fastest gain since 1997, when Japan slid into 15 years of deflation. The Rengo umbrella labor group has called for a 5 percent increase. The talks cover both base and bonus pay.
