This year’s wage negotiations point to the fastest pay growth in 30 years
Higo Bank is no outlier. Annual nominal wages in Japan rose by just 4% from 1990 to 2019, compared with 145% in America, according to the, a rich-country club. Unions emphasise job stability over raises; bosses are reluctant to lift pay amid poor productivity growth. This has hampered efforts to escape deflation or low inflation. Thus the Bank of Japan has maintained a doveish policy stance despite headline inflation topping 4% this year.
But recent data suggest change may be on the way: this year’s wage negotiations point to the fastest pay growth in 30 years. Daniel Blake of Morgan Stanley, an investment bank, calls it “the biggest macro development in Japan in a decade”. For Ueda Kazuo, who took over asParsing Japanese wage figures requires understanding local quirks. Wages are set when firms and unions meet for yearly negotiations known asor “the spring offensive”.
According to figures released by Japan’s confederation of labour unions on April 5th, base pay will rise by 2.2% and headline wages by 3.7% this year, compared with 0.5% and 2.1% last year. Blue-chip firms have been particularly generous. Fast Retailing, a clothing giant which owns brands including Uniqlo, gave its regular workers increases of as much as 40%. More data will trickle in until July, as medium- and smaller-sized firms report results.
Consumer prices have risen at a pace not seen in four decades. Although most of the rise comes from cost-push factors, such as imported food and energy, higher headline numbers have raised expectations and placed pressure on bosses. As Mr Kasahara puts it: “Companies have a responsibility to provide wages that match inflation—and not just big firms in Tokyo.
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