After decades of deflation and cost-cutting, the parent company of Uniqlo, Fast Retailing Co. Ltd., announced on Wednesday that it would increase wages by as much as 40%. This is a very visible indication that Japan’s historically low salaries may be beginning to move.
Despite the fact that it appears doubtful that the rest of Japan Inc. will provide increases on the same magnitude, the action by the casual apparel giant is likely to intensify focus on worker pay ahead of annual spring labour negotiations.
The cost of everything from food to petrol has increased by amounts that were once inconceivable, prompting Prime Minister Fumio Kishida to regularly push businesses to raise wages.
The third-largest economy in the world is now arguably facing its biggest issue due to the bad quality of pay. The average annual wage in Japan was $39,711 in 2021, which is significantly less than the OECD average of $51,607 and not much different from the early 1990s.
According to a spokesman, Pei Chi Tung, Fast Retailing’s decision represented the first time in at least 20 years that the company, which runs more than 3,500 clothing stores worldwide, would change compensation across the board.
She said that there was a “urgent need” to increase pay in Japan, where it has remained low in comparison with abroad businesses, and that the adjustment was intended to make the company’s work style and compensation more globally competitive.
According to the corporation, starting in March, new graduates would get 300,000 yen ($2,300) a month instead of the current 255,000 yen, a rise of almost 18% annually. According to the report, the salary for new store managers will rise by about 36% to 390,000 yen per month.
