Reuters reports that some of Japan's biggest employers are going to include new pay hikes in 2024, pushing the average household spending. This move is seen as a strategic effort to stimulate economic growth amidst pressures of inflation and labor shortages.
The projected changes in employee remuneration may have been influenced by several socio-economic factors within Japan. According to a Reuter's article, businesses, unions, and economists alike say that the labor and cost pressures in Japan have prepared the economy for the coming pay hikes, heading into key spring wage talks next year. Suntory Holdings Ltd, a leading beverage maker, plans to give almost 7,000 employees an average monthly pay hike of 7% next year. This is to help uphold talent in a tight labor market and manage inflation. Also, Meiji Yasuda Life Insurance Company plans to raise the annual pay for 10,000 of its employees by 7% on average next April.
Key figures within Japan's financial sector have also discussed this crucial topic. According to a Reuter's article, Bank of Japan Governor Kazuo Ueda explains that one of the conditions that need to be fulfilled in order to disseminate the monetary stimulus of the past years is sustainable wage growth. Because of this, a plan of considerable pay hikes among the biggest Japanese employers is now in place including back-to-back annual pay bumps. Hisashi Yamada, a labor expert and professor at Hosei University, said "A combination of the chronic labor crunch and stubborn inflation will lead next year's wage negotiations to result in the same or even higher pay from this year." Data from OCED reveals that average wages over the past three decades have barely risen due to chronic deflation and an increased discouragement of larger firms from pay hikes.
The information regarding the wage hike comes from a highly reputable news source. According to Investopedia, Reuters is a news media company and global information provider that is currently headquartered in London, England. Its parent company is Thompson Reuters Corporation. This is because Reuters was an independent news company until the Thompson Financial Corporation, headquartered in New York, bought the media agency in 2008. This agency provides analytics, data, content, trading, news articles, and messaging capabilities to a worldwide audience. It is a major provider of financial markets information and news.