Japanese firms agree to biggest pay hikes in 33 years, union group Rengo says
JAPANESE companies have agreed to raise pay by 5.2 per cent on average this year, the biggest rise in 33 years, the country’s largest union group Rengo said on Thursday (Apr 18), wrapping up its fourth tally of the 2024 labour talks.
The outcome of the “shunto” labour offensive is a barometer for spending and durable inflation, and a key factor the central bank gauges to decide on next steps, after its landmark decision in March to end negative rates.
“The tide of wage hikes is firmly in place,” Rengo said in a statement. The raises were the biggest for the fourth round, for which it began compiling comparable data in 2013, it said.
Bank of Japan governor Kazuo Ueda has said sustained wage growth and inflation are crucial for normalising monetary policy, while Prime Minister Fumio Kishida has also expressed hopes that generous pay hikes would put a decisive end to more than two decades of deflation.
“Wage hikes are much faster than expected probably because of high import costs and government pressure on boosting pay,” said Takahide Kiuchi, executive economist at Nomura Research Institute. “If the ongoing yen weakening pushed up inflation, the Bank of Japan may bring forward the timing of its next rate hikes to the summer even though monetary policy won’t target currencies.”
Results of the closely watched pay talks are announced in several stages, led by blue-chip firms in March and followed by small firms concluding talks around the middle of the year.
The first round of talks produced a pay raise of 5.28 per cent, a 33-year high, with the pace of raises inching down as more firms join the tally. The third round ended with an average 5.24 per cent raise cumulatively.
As for small firms with fewer than 300 employees, wage hikes have accelerated to 4.75 per cent from 4.69 per cent in the previous round, a trend Rengo chief Tomoko Yoshino described as “strong”.
On top of automated annual salary gain, the base salary that raises corporate fixed labour costs and affects bonuses, retirement pay and pension payouts, would go up by 3.57 per cent, well above Rengo’s demand for more than 3 per cent.
A separate corporate survey by credit research firm Teikoku Databank found that 77 per cent of the 1,050 respondents raised wages this year. REUTERS
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