Japan’s largest business lobby, Keidanren, and trade unions began their annual labor negotiations today, Wednesday.
- Expectations are for another round of significant wage increases.
- Japanese policymakers are particularly focused on whether these pay hikes will extend to smaller businesses.
Major companies have already committed to substantial salary increases, strengthening the case for the Bank of Japan (BOJ) to raise interest rates later this week.
Japan’s Centre for Economic Research found in a survey that
- large firms are expected to offer an average 4.74% wage hike —a slight decrease from last year’s 5.33%, but still a solid gain
Japan’s largest union, Rengo, is pushing for at least 5% wage hikes in 2025
- and a 6% target for smaller firms to help reduce the income disparity with larger corporations
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The Bank of Japan meet on January 23 and 245 and improving wage prospects are helping to boost expectation that Bank will hike its rate.
Bank of Japan Governor Ueda