Japan’s top companies have agreed to their highest annual wage increase in seven years, boosting Prime Minister Fumio Kishida’s campaign for a ‘new capitalism’ to help narrow the gap between rich and poor.
Major employers, including Toyota, Hitachi and Toshiba, raised wages amid a rise in the price of oil and wheat as a result of the war in Ukraine that has pushed up the cost of everything from fresh food to energy. But only a handful of companies met Kishida’s target of a 3 percent pay increase for employees.
After years of deflation, prices in Japan have already risen amid the coronavirus pandemic, and economists predict the country’s consumer price index will exceed 2 percent next month.
Since 2000, real wages have risen just 0.39 percent and South Korea now surpasses Japan in average wages, according to OECD data.
Manufacturers, including autos and electronics, offered to raise salaries an average of nearly 2,000 a month, according to the Japan Council of Metalworkers’ Unions, the highest increase since 2015. Nippon Steel and NEC increased wages by about 3 percent, while Hitachi raised wages by 2.6 percent.
Shortly after his election victory in October, Kishida pledged to tackle inequality in Japan and redistribute wealth from corporations to households, in what he described as a “new form of capitalism.”
“Management is more aware than usual of the need to invest in people,” JCM chairman Akihiro Kaneko told reporters. Masakazu Tokura, chairman of the Keidanren, Japan’s largest corporate lobby group, said “the momentum for wage increases has been strong. I hope this will be an incentive for companies considering pay increases.”
Toyota reached an agreement early in the negotiations with the union that represents its employees and pledged to fully meet their salary and bonus demands. The company’s president, Akio Toyoda, thanked employees for their efforts, despite the uncertainties caused by the pandemic and the global chip shortage that has paralyzed the auto industry. Its rivals Nissan and Honda followed suit and agreed to the demands of their unions.
UA Zensen, Japan’s largest industrial union that includes textile, trade and restaurant workers, said this year saw an average increase of 2.55 percent from Thursday, with more than 70 percent of unions winning a pay rise for their members. 2019 levels.
“Managers are more tolerant of wage increases than previously expected as many companies recovered their performance last year and are willing to retain talent with higher wages,” said Hisashi Yamada, the vice president of the Japan Research Institute, a think tank.
He said that while it remains to be seen whether the services sector and smaller companies follow suit, the move by large companies was the first sign of a cycle of wage increases amid rising consumer prices.
However, UBS Japan economist Masamichi Adachi said Japan’s recovery from the pandemic was weaker than the US and Europe, making the prime minister’s 3 percent target for wage increases “too ambitious”.
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