Uniqlo parent Fast Retailing Co Ltd on Wednesday said it would raise wages by as much as 40%, in a high-profile sign that Japan’s rock-bottom salaries may be starting to budge after decades of deflation and cost-cutting.
The move by the casual clothing giant is likely to heighten focus on worker pay ahead of annual spring labour negotiations, although it looks unlikely that the rest of Japan Inc will deliver increases on the same scale, reports Reuters.
Prime Minister Fumio Kishida has repeatedly called for companies to increase wages, a plea that has gained urgency as prices have surged, leading to once-unthinkable increases in the cost of everything from food to fuel.
The poor state of pay has become arguably the greatest problem for the world’s third-largest economy. In dollar terms, average annual pay in Japan was $39,711 in 2021, well below the OECD average of $51,607 and little changed from the early 1990s.
“Fast Retailing aside, there have been a number of companies that up to last year have significantly boosted their rate of pay increases. That’s a positive factor for the Japanese economy,” said Taro Saito, executive research fellow at NLI Research Institute.
Still, he cautioned that Fast Retailing’s case was that of one company with the wherewithal to afford sharp increases, which wasn’t true of many other Japanese companies.
Fast Retailing’s move marked the first time in at least 20 years that the company, which operates more than 3,500 clothing stores worldwide, would revise remuneration across its entire group, said spokesperson Pei Chi Tung.
The change was aimed at making the company’s work style and remuneration more globally competitive, she said, adding that there was an “urgent need” to raise pay in Japan, where it has remained low compared with overseas operations.
From March, new graduate employees would be paid 300,000 yen ($2,300) a month, compared with 255,000 yen now, representing an annual increase of around 18%, the company said. New store managers will see an increase of around 36%, to 390,000 yen a month, it said.
