Japan survey points to over half of firms expecting to raise wages by at least 3% next FY

Reuters Japan Corporate Survey

In brief:

• Over half of Japanese firms plan to raise wages by 3% or more for the next business year, according to a Reuters survey.
• 42% of firms expect wage hikes between 3% and 5%, while 9% foresee increases of 5% to 7%.
• 41% anticipate wage increases between 1% and 3%.
• Survey conducted by Nikkei Research reached 505 companies, with 240 responses.
• More than two-thirds of firms plan wage hikes at the same level or higher than this year.
• Average wage increase this year was 5.1%, the highest in 30 years.
• 52% of respondents intend to keep raising wages despite earnings fluctuations; others do not.
• Some firms express concerns about raising wages during poor earnings due to potential job losses.
• Nearly two-thirds believe Prime Minister Ishiba’s 40% minimum wage increase target is unrealistic.
• Concerns about rising costs impacting smaller companies and risking bankruptcies were noted.
• 83% of respondents prefer office-based work post-COVID, while 17% favor expanding remote work.
• Flexible work arrangements are seen as beneficial for attracting and retaining talent amidst labor shortages.

The context of this survey is that decades of slow wage growth are seen as hindering domestic demand and economic sustainability, and that Bank of Japan Governor Ueda repeatedly emphasizes the need for sustainable wage increases to reconsider interest rate hikes (normalising monetary policy)

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Survey conducted by Nikkei Research reached 505 companies, with 240 responses.

ps, Japan’s financial year runs April 1 to March 31

We get Japanese wage data later:

• Economic calendar in Asia Thursday, November 7 – Japan wages, China and Australian trade

This article was written by Eamonn Sheridan at www.forexlive.com.