© Reuters. FILE PHOTO: Members of the Japanese Trade Union Confederation, commonly known as Rengo, gather at their annual May Day rally to demand higher wages and better working conditions, in Tokyo, Japan April 29, 2023. REUTERS / Issei Kato
By Tetsushi Kajimoto
TOKYO (Reuters) – Japanese companies have offered the biggest pay rises in three decades in this year’s talks with workers, the country’s largest labor group, a development economist who economists said said on Wednesday development, will help rekindle sluggish consumer demand.
A survey by Rengo, Japan’s umbrella trade union group, has shown that wage increases first reported by unions at the largest employers in March have now extended to workers in small and medium-sized enterprises (SMEs) or those with 300 or fewer members.
The final survey of 5,272 Rengo-affiliated unions showed an average wage increase of 3.58%, or 10,560 yen ($73.04) per month, the largest increase since 3.9% seen in 1993 Among them, SMEs increased wages by 3.23%, also the fastest. pace in three decades.
Wage growth is one of the key trends the Bank of Japan (BOJ) is watching closely as it determines if and when it should roll back its ultra-loose monetary stimulus.
BOJ Governor Kazuo Ueda has repeatedly stressed the need to maintain accommodative policy until wages rise enough to sustainably keep price growth around his 2% target.
“Rising prices and a chronic labor shortage are driving up wages, which will continue to rise next year. What is important from now on is to bring real wages back into positive territory “said Hisashi Yamada, an economist and professor at Hosei University.
“Wage hikes will help stabilize inflation at 2% towards next year, keeping the central bank under pressure to sooner or later relinquish control of the yield curve.”
The wage increases could bring some political support to Prime Minister Fumio Kishida, who has made wages a key part of his political platform as a weak yen and higher import prices drive up the cost of living.
Japanese wages have been virtually stable since the bursting of the asset bubble in the 1990s and are now well below the average for OECD members.
Big business summer bonus payments are expected to rise 3.9%, up for the second straight year, though the gains are likely to be uneven, according to a survey by Keidanren, Japan’s biggest business lobby.
($1 = 144.5700 yen)