January 12, 2023: -On Wednesday, Uniqlo parent Fast Retailing Co Ltd said it would raise salaries by nearly 40%, indicating that Japan’s rock-bottom earnings may be starting to budge following the decades of deflation and cost-cutting.
The move by the casual clothing firm is likely to heighten attention on worker pay ahead of spring labour negotiations every year. However, it is unlikely that the rest of Japan Inc will deliver increases simultaneously.
Prime Minister Fumio Kishida has called for companies to increase wages. This plea has gained urgency as costs have increased, leading to once-unthinkable increases in the prices of everything from food to fuel.
The poor state of pay has been arguably the most significant problem for the world’s third-largest economy. In dollar terms, the average annual income in Japan was $39,711 in 2021, well less than the OECD average of $51,607 and little transfer from the 1990s.
“Fast Retailing aside, there have been several companies that, up to the previous year, have significantly boosted their rate of pay increases. That’s a positive sign for the Japanese economy,” said Taro Saito, an executive research person at NLI Research Institute.
Still, he stated that Fast Retailing’s case was that of one firm with the money to afford sharp increases, which was different from many other Japanese companies.
Fast Retailing’s move marked the initial time in nearly 20 years that the company, which operates over 3,500 clothing stores worldwide, would revise remuneration across its total group, said spokesperson Pei Chi Tung.
The change was sought to make the company’s work style and remuneration more globally competitive, adding an “urgent need” to raise payment in Japan, where it has remained low in comparison with overseas functions.
In March, the establishment stated that new graduate employees would be paid 300,000 yen a month, which corresponded with 255,000 yen now, representing an annual growth of around 18%. It said that new store leaders would see an increase of nearly 36% to 390,000 yen a month.
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