Japan's top companies offered their largest pay increases in a quarter century on Wednesday, as the outcome of annual labour talks showed Japan Inc heeding Prime Minister Fumio Kishida's calls for higher wages to counter a surge in inflation.
Japanese wages have been a casualty of years of sputtering growth since the late 1990s, leaving worker pay nearly flat and well behind the OECD average. But now, with inflation at its highest in four decades, thanks to a weaker yen and rising commodities costs, Kishida is pushing hard for higher pay.
Whether that will be sustainable by companies remains to be seen. This year companies are expected to raise wages at "shunto" spring wage talks that wrap on Wednesday by 2.85%, according to a survey of 33 economists taken by Japan Economic Research Center (JERC).
That's far above last year's 2.2% and the fastest gain since 1997, when Japan slid into 15 years of deflation.
The Rengo umbrella labour group has called for a 5% pay increase. The wage talks involve both base and bonus pay.
Given that consumer inflation, at 4.1%, outpaces wage hikes, pay rises of 3% or more need to continue in the coming years to sustain price stability at 2%, the central bank's target, said Hisashi Yamada, senior economist at Japan Research Institute.
Industrial conglomerate Hitachi Ltd (6501.T), a cornerstone of corporate Japan, said it would increase overall pay by an average of 3.9%, compared to a 2.6% increase a year earlier.
Reuters
More about:
