More organisations in Japan plan to raise wages in 2023

Over 60% of employers plan to raise wages in response to cost of living and talent retention needs, with many committing to at least a 3% increase.
By: | May 9, 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