Japanese firms deliver biggest pay hikes in 33 years, union survey shows (updated)

Rengo

03/07/2024 10:05

(Adds union's official's comment in paragraphs 8-9)
    By Tetsushi Kajimoto
       TOKYO, July 3 (Reuters) - Japanese companies delivered
the biggest wage hikes in three decades this year, the nation's
largest union said on Wednesday, prompted by labor shortages and
an inflationary squeeze on household income.
        Monthly pay was up 5.10% on average this year, according
to a survey of companies conducted since March by Rengo, the
union with about 7 million members.
  
        The outcome of the "shunto," which means the spring
labour offensive, is seen as key for Japan to achieve a positive
cycle of economic recovery, driven by better household income
and consumption that outweigh the rising cost of living.
    While big firms, with 300 or more union-backed employees,
raised wages by 5.19%, small firms increased the pay by 4.45%,
it said.
        The achievement of positive and self-sustaining growth
could help policymakers put a decisive end to deflation and
bring the Bank of Japan (BOJ) closer to further interest rate
hikes as part of its efforts to normalise monetary policy.
  
        In mid-March, major firms said pay raises had
accelerated to 5.28% - the biggest since the country's bubble
burst in the 1990s. The BOJ then made its landmark decision to
end negative interest rates and yield curve control policy.
  
        With big firms' pay rise becoming a done deal, the
attention has now shifted to whether wage hikes may be spreading
to small firms struggling to pass on costs to raise profit
margins.
  
        "In short, small firms have struggled to pass on costs
to clients (who were at the lower end of supply chain). We need
to exert more efforts to help boost their pricing
competitiveness and realise 5% of wage hikes next year for small
firms as well," senior Rengo official Akira Nidaira told
reporters.
  
        "We also hope the government steps up efforts to help
stabilise prices and currency so that more households can
improve their living."
  
        While part-timers' hourly pay is rising quickly, given
corporate Japan's need to lure young and able workers into
coping with a chronic labour crunch, income gaps remain.
  
        As part of efforts to address the gap, Prime Minister
Fumio Kishida's administration has vowed to raise minimum hourly
pay to 1,500 yen ($9.27) from around 1,000 yen on average by the
mid-2030s.
  
    ($1 = 161.8300 yen)
  

 (Reporting by Tetsushi Kajimoto
Editing by Chang-Ran Kim and Anil D'Silva)
 ((tetsushi.kajimoto@thomsonreuters.com))