Another year of big wage hikes likely at big Japan firms, business lobby chair says
FILE PHOTO: A businessman walks inside the Japan bridge at La Defense financial and business district in Puteaux, near Paris, France, May 16, 2018. REUTERS/Charles Platiau/ File Photo
TOKYO : Large Japanese firms are likely to increase wages by about 5 per cent on average in 2025, the same as last year, the chair of a major business lobby said on Tuesday while pledging efforts to spread the wage growth momentum to smaller firms.
Prime Minister Shigeru Ishiba sees strong wage growth as key to supporting a fragile economic recovery. The Bank of Japan has said sustained, broad-based wage hikes are a prerequisite for pushing up borrowing costs.
"The pace of growth at big firms is likely to be similar to last year," Takeshi Niinami, who chairs Keizai Doyukai, one of the country's biggest business lobbies, said at a press conference.
"However, it is crucial for small and midsized enterprises (SMEs) to achieve wage growth that exceeds a year earlier for three consecutive years," Niinami said.
Japanese companies agreed to an average 5.1 per cent wage hike in 2024, the biggest increase in three decades, according to Rengo, the nation's largest union.
Rengo is seeking wage hikes of at least 5 per cent in 2025, while setting a target of at least 6 per cent for smaller firms to narrow the income gap with workers at large firms.
According to a recent survey by the Japan Chamber of Commerce and Industry (JCCI), a business lobby for SMEs, 48.5 per cent of its member firms plan to raise wages, but only about 10 per cent plan increases of 5 per cent or more.
"There will be a growing number of firms deciding to increase wages slightly more than last year," Ken Kobayashi, JCCI's chair, said at the same press conference.
To help SMEs implement wage increases, it is important to help them pass on rising costs, including labour costs, to prices, he said.
Some top company executives who attended a New Year event hosted jointly by Japan's top three business lobbies on Tuesday expressed positive outlooks for wage growth.
"The momentum for solid wage growth is rising," Yoshinobu Tsutsui, the chairman of Nippon Life Insurance, told reporters, adding that his firm is planning to hike wages by 6 per cent or more for sales employees.
Takashi Ueda, chief executive of Mitsui Fudosan, said the real estate developer is targeting a wage increase of more than 5 per cent. "It's important to continuously raise wages," he said.
