Japanese firms agreed to wage increases averaging 5.28 percent for this year's negotiations with labor unions, the Japanese Trade Union Confederation said Friday in a preliminary survey, marking the sharpest rise in more than 30 years.

The pay hikes, which have fueled expectations that the country's economy may finally move out of chronic deflation, will likely pave the way for the Bank of Japan to decide to phase out its ultraloose monetary policy.

The central bank has said it will study the level of wage increases to consider whether it should scale back stimulus measures. The BOJ is scheduled to hold a two-day policy meeting starting Monday.

Tomoko Yoshino, the chair of the Japanese Trade Union Confederation, speaks at a press conference in Tokyo on March 15, 2024. (Kyodo) 

The average wage increase surpassed the 5 percent mark for the first time since 1991 and translates into a 16,469 yen ($110) rise per month, said the confederation, also known as Rengo, which had aimed to achieve hikes averaging 5 percent or more this year.

The survey covered 771 of its member unions, which reported their negotiation results by Friday morning.

Among them, 358 unions at small and medium-sized firms won themselves pay hikes averaging 4.42 percent, or 11,912 yen.

As for nonregular workers, hourly wages will increase by 6.47 percent, or 71.1 yen, the biggest rise since comparable data became available in 2013.

Major firms such as Toyota Motor Corp., Nissan Motor Co., and Hitachi Ltd. met their unions' requests in full in this year's negotiations, against the backdrop of soaring prices weighing on households.

"This is an appropriate start for a turnaround for Japan," Rengo Chair Tomoko Yoshino said at a press conference. "We have to realize wage hikes for everybody, including those who work at companies without unions."

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