70% of Japan Companies to Raise Pay Scales in FY 2024

Yomiuri Shimbun file photo
The Finance Ministry’s headquarters building in Tokyo.

Tokyo, April 22 (Jiji Press) — About 70 pct of companies in Japan will implement pay scale increases in fiscal 2024, a survey by the Finance Ministry showed Monday.

According to the survey, the proportion of companies planning to raise their pay scales stood at 70.7 pct, up by 6.3 percentage points from the previous year.

The proportion of such companies rose 8.8 points to 63.1 pct among small and medium-sized firms, outpacing a 3.2-point increase among large companies.

Companies planning to implement pay scale increases of 3 pct or more accounted for 59.8 pct, up 23.4 points. Companies at which pay scale hikes and regular pay increases will total 5 pct or more came to 36.5 pct, nearly doubling from the previous year.

“Raising employees’ motivation to work, improving working conditions and preventing employees from quitting” was the most common reason for pay hikes, followed by “responding to rising prices” and “securing new employees.”

Meanwhile, 50.2 pct of small and medium-sized firms said that they had been unable to pass on rising labor costs in their product and service prices, partly due to a lack of understanding from their clients.

The survey also showed that about 40 pct of firms were struggling with labor shortages even after raising wages.

In the survey, an official in the hotel industry said that continued population falls and low wages are behind labor shortages.

An official at an industrial machinery maker said that some flexibility is needed in working hour regulations.

The survey was conducted from March to this month, receiving answers from around 1,100 companies throughout Japan.