60% of Smaller Companies Boost Salaries in Japan

The Yomiuri Shimbun

14:55 JST, June 1, 2023

A survey conducted by the Japan Chamber of Commerce and Industry found 62.3% of small and mid-sized companies have raised their wages since April, an increase of 11.4 percentage points from the previous survey in June last year.

According to the survey results announced Wednesday, more than half of companies that raised wages, including those planning to do so, increased total yearly pay, including bonuses, by at least 3% from the previous year.

The survey was conducted in May among about 2,500 members of chambers of commerce and industry nationwide, with responses obtained from about 2,000 companies.

The survey found that 53.7% of the companies that raised wages increased base pay, a rise of 15.0 percentage points, while 14.0% of them raised salaries by establishing new allowances, an increase of 5.2 percentage points.

However, only a little more than 30% of the companies that raised their wages did so due to their improved performance. Many of the increases were “defensive wage hikes,” implemented regardless of performance, against the backdrop of labor shortages and other factors.

Of the companies that raised wages, 27.0% increased their total yearly pay by at least 4%, while 23.5% did so by more than 3% but less than 4%, indicating as many as 50.5% of them raised total yearly pay at least 3%.

According to the Japan Business Federation (Keidanren), the average pay raise for leading companies stood at 3.91%, the highest level in 30 years, apparently influencing the high level of wage increases by smaller companies.

An official at the chamber of commerce said the figures were “surprising.” Eighty-five percent of the firms that increased wages said the raises were to secure and retain human resources.