Japanese Firms Are Raising Wages to Counter Labor Shortages

Several Japanese firms are beginning to increase wages to entice workers and combat staff shortages based on a poll by Reuters. This could be an indication that Japan is possibly dealing with a salary that has plateaued over the past decades.

The survey also reported that increased salaries are not the number one tactic for companies. digitalization is noted to be the most popular option to address the short staff of several firms.

Japanese companies have been steering clear of increasing wages due to the years of deflation which have made it harder to pass the additional costs to its consumers.

As prices of commodities are higher, coupled with a weaker yen pushing the living costs up and adding strain on workers, Prime Minister Fumio Kishida has called on companies to increase wages.

“Overall we are facing labor shortages and we are struggling to lure part-timers at stores in particular. We are responding by raising wages but there’s a limit,”  said a survey respondent.

The poll of Reuters included 495 big non-financial firms and underscores the increased willingness of companies to hike up salaries.

The rise in wages or starting salaries was selected by 44% of the survey respondents as one of the options they were planning on adopting.

Back in 2017, the survey respondents that wanted to adopt an increase in wages was only 25%.

“The tide is changing as labor shortages have prompted more and more companies to raise wages albeit gradually,” stated Koya Miyamae, a senior economist at SMBC Nikko Securities.

He adds that “Now is just the beginning, as the population increasingly ages and dwindles, the momentum to hike wages will gather steam,”

Source: Inquirer