Japan's Major Firms Agree to Historic Wage Hikes Amid Labor Shortages

In a landmark move, Japan's largest companies have agreed to raise wages by an average of 5.28%, the highest increase in 33 years, signaling potential shifts in central bank policy.

• This year's spring wage negotiations have resulted in an average pay increase of 5.28%, a 33-year high, driven by corporate earnings and labor shortages.
• The Bank of Japan may shift away from its long-standing negative interest rate policy following these significant wage hikes.
• Analysts predict that real wages could turn positive by the second quarter of 2024, helping to boost household spending and economic growth.
• Part-time workers are set to receive pay increases of 6%, addressing rising income inequality and inflation.
• The government hopes these wage hikes will trickle down to smaller firms, which make up the majority of Japan's enterprises but often lack pricing power.

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The Japan Times CNA CNA