Organisations in Japan urged to consider wage hikes exceeding 4%

Keidanren, Japan’s biggest business lobby, is calling on major organisations to consider wage increases with “enthusiasm and determination stronger than this year”, signalling its intention to seek pay hikes of over 4% in the upcoming annual wage negotiations.

This move comes amid rising inflation and a growing consensus that organisations in Japan need to do more to boost wages and support consumer spending.

The average pay hike at major member organisations this year stood at 3.99%, the highest in 31 years. However, with prices rising at a faster pace, labour unions are calling for even higher wage increases next year. Rengo, Japan’s largest labour union, has said it will demand a pay hike of at least 5%, while UA Zensen, the country’s largest industrial union, is seeking a total wage increase of 6%.

The draft guidelines of Keidanren (Japan Business Federation) do not include a specific numerical target for wage increases. However, it did define 2024 as “an extremely important year to attain sustainable wage growth”. The guideline also emphasised the importance of pay-scale increases, which can provide a more permanent boost to employees’ incomes than one-off bonuses.

READ MORE: Japan’s labour union pushes for pay hike in 2024

In addition to calling for higher wages, Keidanren is also urging the government and the Bank of Japan to steer monetary policy towards realising an appropriate level of inflation. The central bank has a target of 2% inflation, but prices have been rising at a faster pace in recent months, driven by factors such as the war in Ukraine and the yen’s depreciation.

The guideline further emphasised the significance of wage hikes at small and midsize organisations, which employ nearly 70% of Japan’s workforce, in building momentum for wage increases across the nation, reported The Japan Times.