We wouldn’t read much into the smaller pay hikes for employees of large manufacturing firms that have been agreed in this year’s Shunto wage negotiations. Wage growth for most workers looks set to remain strong by recent standards this year. But even faster increases would be needed to drive inflation to the Bank of Japan’s 2% target. Recent news on wage developments has been conflicting. On the one hand, data on labour cash earnings show that the tighter labour market is finally fuelling cost pressures. Preliminary figures for January show that base pay rose the most in 17 years. While the final figures may show smaller gains, hourly earnings of part-time workers are also growing strongly.
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