Japan's annual wage negotiations kicked off on Wednesday, as the country's most powerful business lobby vows pay hikes that outpace price rises in line with Prime Minister Fumio Kishida's repeated calls to rejuvenate the inflation-plagued economy.
The Japan Business Federation is urging its member companies to offer pay increases larger than last year's 3.99 percent hike during this year's wage talks.
The Japanese Trade Union Confederation, or Rengo, aims to achieve a pay hike of 5 percent or higher, compared with its goal of around 5 percent in the 2023 wage negotiations.
Leaders of the business group, also known as Keidanren, and the largest labor union in Japan joined a forum held in Tokyo to mark the official start of the annual "shunto" spring negotiations.
Wage negotiations at most large companies are expected to conclude by mid-March, with smaller firms completing theirs later.
This year's negotiations are attracting heightened attention in several ways. Japan is at risk of stagflation if pay hikes continue falling behind price rises.
The Bank of Japan is closely watching the outcome to gauge whether it should start moving out of more than a decade of large-scale monetary easing, introduced in part to free Japan from its deflationary malaise.
The Kishida government also provides support for small companies to raise salaries with tax breaks and subsidies.
"It is the social duty of private firms and Keidanren to pursue wage hikes that beat soaring prices with stronger resolve than last year," Masakazu Tokura, the chairman of Keidanren, said in a video message.
"The current cost-push inflation is a once-in-a-lifetime chance to move the country completely out of deflation," Tokura said.
Major Japanese companies raised wages by 3.99 percent on average in last year's wage negotiations, the biggest increase in 31 years, according to the business lobby.
Tokura emphasized that the positive effect must also spread to small and medium-sized firms to achieve ongoing wage increases in the country.
Even before the start of this year's wage talks, a number of major firms had expressed their intent to considerably boost their workers' pay in response to inflation, logging its largest increase in 41 years last year.
Real estate developer Mitsui Fudosan Co. said it will raise wages by 10 percent on average, while convenience store operator Lawson Inc. said it will offer a pay hike of more than 5 percent.
"Our way of thinking and practices, which were formed under a long-running deflation on the premise that prices and wages are not likely to change, are beginning to change," Tomoko Yoshino, head of Rengo, said in a speech.
"We are at a critical juncture in realizing a society where economy, prices and wages all grow stably," she said while calling on large companies to review their business terms with smaller firms to allow for their price increases so they can raise wages.
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