Shunto tide should lift wage growth among small firms

This year’s spring wage negotiations resulted in the largest pay hikes since 1991 and we estimate that participating workers will receive a base pay hike of around 3.5%. While it’s mostly the large corporations that participate in those talks, there are good reasons to expect wage growth among smaller firms to follow the Shunto’s lead. Accordingly, we’re sticking to our non-consensus forecast that the Bank of Japan will end negative interest rates and Yield Curve Control at next week’s meeting.