Japan Companie Increase Pay:

 Article Source: https://mainichi.jp/english/articles/20230507/p2g/00m/0bu/019000c

Article:

TOKYO (Kyodo) -- A total of 62.1 percent of companies in Japan have raised or plan to raise base pay in fiscal 2023, up sharply from 38.7 percent the previous year as they seek to secure talent and match rising prices, a Finance Ministry survey showed.

The trend was notable particularly in the nonmanufacturing sector, with 56.0 percent saying they have or will raise wages, expanding from 28.8 percent the year before, the survey said. In the manufacturing sector, the figure was at 69.8 percent, up from 52.0 percent.

Ideas:

Companies are now beginning to understand, in Japan, they have tp pay wages that are competitive in order to get the best talent out there. 

Maybe over the last few years with pandemic situation, many companies were not in the position to increase wages.

And now that the pandemic is long time companies are in a better position to now increase wages to secure the best talent out there.

They also have to have better better benefits and a better work/life balance situation as today's young workers are not going to work in the conditions their parent did in the past. 

Article:

Hikes of 3 percent or more were recorded for 37.3 percent of the businesses that have raised base pay or plan to, up from 13.7 percent the previous year.

When asked the reasons for raising wages, including base pay and bonuses, 80.4 percent said they seek "to enhance the motivation of the employees, improve their labor conditions and prevent them from leaving jobs." Some 64 percent said they did so "to respond to rises in commodity prices."

Ideas:

Again companies now realize if they don't increase wages and also benefits they are not going to keep their best workers and they will move to other companies if possible.

Other companies increased wage as they see inflation is a major challenge and they want their employees to have a decent living and able to take care of their families as needed.

At the same time, while 3 percent is good is it enough to offset inflation in the Japanese economy. Perhaps with bonuses twice a year 3 percent is enough for most workers.

But what about small and medium sized companies. Were they able to give 3 percent increases or was it just big companies.

Article:

Among the respondents, a medium-sized retailer in western Japan, said, "At a time less people are seeking to work in sales and customer services, we cannot acquire talent unless we improve labor conditions."

The survey targeted around 1,200 companies, comprising some 500 large-sized companies and 700 small- and medium-sized firms, from mid-March to mid-April.

Ideas:

Even small and medium sized companies understand they have to increase wages and benefits if they want the best possible talent and or want to keep the talent they have now.

And it's not just about wage increases but also about a balance in work/life conditions and benefits too, which many companies are not beginning to see as very important to keep or get better talent.

Sales and customer service are not so easy jobs these days so companies need to give the wages needed to get the best talent. 

Maybe long gone is the days people were dedicated to their jobs and dedicated to giving their best efforts. But these day young workers want good wages, good benefits, and better work/life conditions or they won't work.

For example there are not that many young Japanese employees in fast food restaurants or convenience stores as they don't think the pay is enough or the hours are too long or many many reasons.

Article:

The percentage of firms that have or plan to raise base pay in fiscal 2023 was calculated based on around 1,000 companies as a parameter, excluding companies who did not respond to the question or were unclear.

The pay raises come after Prime Minister Fumio Kishida called on the business community to increase wages to mitigate the financial burden on households hit by soaring prices of everything from food to gasoline.

Consumer inflation in Japan accelerated to 3.0 percent in fiscal 2022 through March, the fastest pace in 41 years, according to government data.

Ideas:

From maybe 2020 and until now, companies might have considered increasing wages but the pandemic slowed down their plans to increase wages.

And as they have seen and felt the increase in inflation over the past three years maybe they feel it's time to increase wages, reduce the stress that company employees are feeling and meet the Prime Ministers' goal of 3 percent for the good of the economy overall.

Consumer inflation, in this situation is not so much about consumer demand or consumer spending but of course companies pass-on their increased cost to the next in the supply chain including the final customer.

And there is the home energy costs which have increased which has caused families to maybe cutback on their extra income spending. 

Article:

Companies have also been pressured to improve labor conditions to acquire global talent with wages in Japan remaining relatively low compared to other developed countries. Japan's wages are the lowest among the Group of Seven industrialized nations, according to data compiled by the Organization for Economic Cooperation and Development.

The average wage in Japan rose some 6 percent in 2021 from 1990 to $39,711, creating a sharp contrast with the United States, which saw increases of roughly 50 percent during the same 1990-2021 period, the data showed.

Ideas:

While it's easy to compare the US and Japan in terms of wage increases its not easy comparing apples and oranges as the economies are somewhat different. 

But no doubt the average Japanese worker and their salaries have not kept up with inflation increases and or with being able to move or change jobs easily as many companies up until recently didn't see the need to really recruit the best talent possible by not really providing salaries, better work/life balance, and better benefits to attract the best talent.

But now it seems Japanese companies have begun to see the need because today's younger Japanese workers don't want to work the same their parents did. 

Have a nice day and be safe!