More organisations in Japan plan to raise wages in 2023

Japanese Prime Minister Fumio Kishida’s call for organisations to increase wages in response to the rising cost of living has apparently been heeded.

According to a survey conducted by the Japanese Ministry of Finance, 62.1% of organisations have raised or plan to raise base pay in 2023, marking a significant increase from the 38.7% reported in 2022.

The purpose of the wage hike is twofold; to attract and retain talent, and to keep pace with the rising cost of living. The survey, which targeted approximately 1,200 organisations including 500 large-sized and 700 small- and medium-sized organisations, was conducted from mid-March to mid-April 2023.

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The non-manufacturing sector showed a significant increase in willingness to raise wages, with 56% of such organisations indicating that they have or plan to do so, compared to 28.8% in 2022. The figure for the manufacturing sector was 69.8%, up from 52% in 2022.

Moreover, the survey found that 37.3% of organisations that have raised or plan to raise base pay will do so by 3% or more, compared to 13.7% in 2022. The most cited reasons for the wage hikes were to improve labour conditions and prevent employee turnover, with 80.4% of respondents indicating this. Some 64% cited rising commodity prices as the reason for the wage increase, reported Kyodo News.