TOKYO – Uniqlo parent Fast Retailing said on Wednesday that it will raise wages by as much as 40 per cent, in the clearest sign yet 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 could serve as a wake-up call for Japan Inc ahead of annual spring labour negotiations. Prime Minister Fumio Kishida has repeatedly called for companies to increase wages, a plea gaining urgency as households now face 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 totalled US$39,711 (S$52,800) in 2021, well below the Organisation for Economic Cooperation and Development average of US$51,607 and little changed from the early 1990s.
“We welcome reports of companies that have announced aggressive wage hike policies,” top government spokesman Hirokazu Matsuno told a news conference.
“We believe that the best way to address the current increase in prices is to realise continuous increases in wages,” he added.
Uniqlo’s move marks the first time in at least 20 years that the firm, which operates over 3,500 clothing stores worldwide, will revise remuneration across its entire group, a spokesman said.
The change was aimed at making the company’s work style and remuneration more globally competitive, the spokesman said, adding that there was an “urgent need” to raise its pay in Japan, where it has remained low compared with its overseas operations.
From March, new graduate employees will be paid 300,000 yen (S$3,020) compared with 255,000 yen now, representing an annual rise of around 18 per cent, the firm said. New store managers will see a rise of around 36 per cent, to 390,000 yen a month, it said.
Uniqlo’s ability to meet Japanese consumers’ zealous demand for both relatively high quality and low prices has made it known for its “cosupa” – cost performance – turning it into a global retailer and making founder Tadashi Yanai Japan’s richest man.
Consumer prices in Tokyo beat forecasts to hit 4 per cent for the first time since 1982. Rising consumer prices in the Japanese capital are seen as an indicator of the nationwide trend.
Other Japanese companies have announced more modest wage increases to keep up with inflation. Nippon Life Insurance plans to increase salaries for sales representatives by about 7 per cent, while Suntory will raise wages roughly 6 per cent. Brewers Asahi Group Holdings, Kirin Holdings and Sapporo Holdings are also considering increasing base salaries.
Fast Retailing is due to post first-quarter earnings on Thursday. It reported record profit for the year to end-August, as growth in North America and Europe compensated for a slump in its largest overseas market, China, which had been slowed by Covid-19 curbs.
The company’s share price closed 1.42 per cent higher in Tokyo, versus a 1.03 per cent advance in the benchmark Nikkei index, on Wednesday. REUTERS, BLOOMBERG
