TOKYO (Reuters) – Japanese firms have agreed to raise monthly pay by 5.10% on average this year, the biggest in 33 years, the country’s largest union group Rengo said on Wednesday, wrapping up its survey of companies conducted since March.
The outcome of the “shunto,” which literally means 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.
The achievement of the 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 made the initial round of announcement that pay raise had accelerated to 5.28% – the biggest in 33 years. 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.
While part-timers’ hourly pay is rising fast given corporate Japan’s need to lure young and able workers to cope with a chronic labour crunch, income gaps remain wide.
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 now by the mid-2030s.
($1 = 161.8300 yen)
(Reporting by Tetsushi Kajimoto; Editing by Chang-Ran Kim)
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