Wage growth spreads among Japanese SMEs: BOJ survey

MOMENTUM to raise wages has been spreading among small and medium enterprises (SMEs) in Japan this year, a survey by the Bank of Japan (BOJ) showed on Friday (Jul 12).

This reflects labour shortages and efforts to help Japanese employees tackle an inflationary squeeze.

The central bank’s survey on regional SMEs in the country reported that enterprises now perceive labour shortages as here to stay, with a wide recognition for continued wage hikes.

While many companies still find it difficult to pass rising labour costs to prices, there is a growing movement to implement or consider such price hikes, especially in industries where labour shortages are severe.

The momentum among SMEs – where wage growth typically lags behind that of big companies – could set the stage for another interest rate hike by the BOJ.

The country’s largest union Rengo said that monthly pay for Japanese workers will rise 5.1 per cent on average this fiscal year, marking the biggest wage hikes in three decades in the country.

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Rengo – which has about seven million members – noted that big companies with 300 or more union-backed employees raised wages by about 5.2 per cent, while small enterprises increased pay by a smaller 4.45 per cent. REUTERS