Japan's all set for a 3.6% wage hike, its highest in three decades

Japanese firms this year have raised or will raise monthly average regular wages by a record amount, an annual government survey showed on Tuesday.

Policymakers have said hiking wages is essential to ending deflation and to achieving and sustaining an inflation rate of 2 per cent in a stable manner.

Monthly regular pay rose 3.2 per cent, or 9,437 yen ($63.59), on average this year, both record highs since comparative figures began in 1999, showed a Ministry of Health, Labour and Welfare poll conducted July 20 through Aug. 10 with 1,901 respondents.

Last year, regular pay, which includes allowances but excludes overtime, holiday and special payments, rose 1.9 per cent, or 5,534 yen.

The percentage of firms that raised or will raise average regular wages this year reached 89.1 per cent versus 85.7 per cent in last year’s poll, the highest since 2019.

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The impact of that percentage increase was reflected in the survey’s record results, a ministry official said.

Wages had been stagnant for decades until last year when rapidly rising raw material costs propelled inflation and added pressure on firms to compensate employees accordingly.

Major companies agreed to average pay hikes of 3.58 per cent earlier this year, the highest increase in three decades, said trade union group Rengo.

Early indications from businesses, unions and economists are that the labour and cost pressures behind this year’s hikes will persist into next year’s spring wage talks.