BNR – Employees in Japan have witnessed their wages rise to an all-time high after the government urged businesses to assist employees deal with price hikes. According to official data, earnings increased by 1.8% in May relative to the previous year, the fastest increase in 28 years.
Despite the increase, when inflation is factored in, the public’s purchasing power has kept on shrinking. In Japan, the globe’s third-biggest economy, inflation has been climbing for over a year now.
Prices have risen globally in the past few months as Covid limitations have been lifted. Furthermore, the Russian-Ukrainian war increased the price of essential commodities such as gasoline and wheat. The depreciation of Japan’s yen further increased the price of ordinary products.
According to Japan’s current inflation rate, core consumer costs increased by 3.2% year on year in May. For decades, many people’s earnings in Japan rarely changed since inflation was essentially inexistent.
Companies Act as Living Cost in Japan Rises
As the cost of living in Japan kept on rising in March, Prime Minister Fumio Kishida encouraged companies to act. Some corporations announced salary increases for their staff this year. Among the corporations are Fast Retailing, which owns Uniqlo, and automotive titans Toyota and Honda. Rengo, Japan’s trade union, claimed employers were open to the highest pay rises in three decades during annual labour discussions.
According to research experts at Japanese investment firm Nomura, salary increases signify a significant change in the structure of the Japanese economy.
“Japan’s potential labour pool shifted to a rapid decline around the end of 2021,” analysts said. “This should put sustained upward pressure on wages.”
Fast Retailing, the parent company of Uniqlo, stated that it was boosting pay to compensate all employees for their passion and skills. The company also stated that it sought to improve its development prospects and competition in accordance with international norms.
Meanwhile, Toyota CEO Koji Sato expressed optimism that the decision will have a good influence on Japan’s auto sector.
Honda, a competitor, stated that the additional funds will mostly benefit younger staff by increasing starting pay.