Japan average pay hike tops 10,000 yen for 1st time amid inflation

Tokyo: The average monthly pay increase at Japanese businesses this year rose 2,524 yen ($16) from 2023 to a record 11,961 yen, a government survey showed this week, exceeding the 10,000 yen mark for the first time amid rising prices.

The figure, representing a 4.1 percent rise from last year, came as management and labor unions agreed on historic wage hikes in this year’s spring wage negotiations. A growth in the minimum wage also contributed to the increase, according to the labor ministry.

Both the value and rate of wage increases exceeded the previous year for the third straight year and hit the highest figure since comparable data became available in 1999.

The results indicate that the recent wage hike trend is gaining traction in a country where companies were traditionally reluctant to raise pay following a long period of deflation.

But the country’s real wages fell for a record 26th straight month in May. Although they turned higher in June and July, the figure declined in August, indicating that pay hikes still have not caught up with rising prices and households are struggling to make ends meet.

The country’s biggest labor union decided earlier this month to demand pay hikes of 5 percent or more next spring, the same level as the target it set for this year.

The Japanese Trade Union Confederation has also set a higher goal for small- and medium-sized companies to help bridge the salary gap between firms of different size.

The latest survey by the Ministry of Health, Labor and Welfare, conducted between July and August, obtained responses from 1,783 firms that employ more than 100 people.

The number of firms that have raised pay or are planning to do so grew to 91.2 percent, up 2.1 percentage points from last year, according to the survey.

By industry, all firms in mining, utility, healthcare sectors either raised pay or plan to increase wages. By contrast, only 74.4 percent of companies in the transportation and postal services sector responded the same way, the survey showed.

Of firms that have adopted a regular pay raise system based on workers’ seniority and years of service, the percentage of firms that raised base pay or are planning to do so rose 2.6 points to 52.1 percent, according to the survey.

Among the factors that led to wage hikes, 35.2 percent of the firms cited better earnings results, followed by a need to secure workforce at 14.3 percent, the health ministry said.