Japan continues to debate feasibility of wage hike

Contrary to the Prime Minister’s call, the Japan Business Federation says it is difficult to set a blanket level of salary increases for all companies.
By: | January 26, 2022

“Business conditions vary from company to company, so we can’t set a uniform level” of wage hikes for all firms,” said Masakazu Tokura, chairman of the Japan Business Federation (Keidanren).

“I think the prime minister took this point into account when he voiced hope for companies that saw profits rise to increase wages by 3%,” Tokura said on the eve of a labour-management forum that kicks off this year’s annual wage negotiations.

Prime minister Fumio Kishida has been pressuring businesses to raise wages as part of efforts to prop up growth and distribute more wealth to households, and has called for uniform wage hikes of 3% or more from companies that have been profitable.

Keidanren, which consists mainly of big, blue-chip firms, has urged profitable firms to raise wages “at levels commensurate to each company’s situation”.

READ: Japan’s major business lobby urges firms to raise workers’ pay

At last year’s labour talks, major companies offered the lowest wage increases in eight years, of below 2%, as the pandemic battered profits.

About 80% of economists in a Reuters poll recently said Kishida’s wage policies are unlikely to trigger a virtuous cycle of growth and wealth distribution, according to Reuters.