(Bloomberg) -- More than 60% of Japanese companies -- a record high percentage -- plan to raise workers' wages next year as they fight to recruit and retain staff, according to a survey by Teikoku Databank.
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Some 61.9% of over 11,000 surveyed companies intend to pledge pay increases as part of annual wage negotiations culminating in March, the report Thursday showed. A year ago, when the wage talks ultimately resulted in the biggest increases in decades, 59.7% of companies surveyed by Teikoku flagged pending hikes.
About 56% of surveyed firms said they plan to raise base salaries, also marking the highest percentage since the data firm began tracking this question in 2007. The survey was conducted in late January.
While the data don't break out the scale of planned increases, they indicate that wage growth momentum is being sustained and rippling more widely, a positive sign for the Bank of Japan as it aims to achieve a virtuous economic cycle of rising wages and spending spurring demand-led price gains. Solid wage gains this year will keep the BOJ on the path toward more rate hikes.
BOJ board member Hajime Takata, a hawk, said Wednesday that further rate hikes would be appropriate if the central bank's economic outlook materializes, including positive corporate actions such as sustained wage gains. Economists largely expect the BOJ to next lift the benchmark rate in the summer.
Japanese workers and employers are currently in the midst of annual pay negotiations, with unions pushing for wage gains equal to or greater than last year's. In the 2024 wage talks, some workers secured the largest pay increase in over three decades, a result that helped prompt the BOJ to conduct its first rate hike in 17 years that same month.
The nation's largest labor union Rengo earlier announced that it would target wage increases of at least this year. The group has ramped up pressure through repeated meetings with government and business leaders over the past few months.
A group of economists forecasts an average wage increase of 4.92% this year, a slightly below last year's 5.33%. Rengo is set to release a tally of laborer demands on March 6 and the first tabulation of deals on March 14.
Thursday's report also underscores the growing pressure on companies coping with chronic labor shortages. Nearly 75% of the firms planning to increase wages cited the need to attract and retain workers with higher pay. The manufacturing, construction, and transportation sectors are among those likely to be most committed to wage hikes as they are some of the hardest hit by labor shortages, the report showed.