18% of Japan’s companies plan to raise salaries by 3% or more

About 43% of Japan’s biggest companies said they intend to raise salaries by 2% to 3%, while another 10% said pay hikes are not in their plans for next year.

These were the findings from a Nikkei survey with 140 CEOs responding to questions on business outlook, but only 61 gave specific answers on their wage plans.

Raising pay is one of Prime Minister Fumio Kishida’s key policy objectives, with the prime minister tweaking tax laws to benefit companies which implement pay hikes.

“I am hoping for pay hikes that eclipse 3%, which will be appropriate for the launch of the new capitalism. I will stand in the forefront to help small- and medium-sized businesses so that they can properly shift raw material, energy and labor costs” onto consumers, he said in late November last year.

Whether companies will heed his call to raise wages more aggressively this spring will be an indicator of whether Kishida can gain traction for his vision of realising a virtuous cycle of economic growth and redistribution of wealth in Japan.

READ: Smaller firms in Japan can transfer costs to larger businesses

Labour unions typically hold wage negotiations with management every spring. Success in pushing forward his policy agenda, keeping the pandemic under control and ensuring the economy recovers are factors that will shape the result of an upper house election next summer.