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70% of Japanese companies will increase pay scales in fiscal year 2024

About 70% of companies in Japan will implement wage increases in the 2024 financial year, a Finance Ministry survey showed on Monday.

The survey was conducted from March to this month and received responses from approximately 1,100 companies across Japan.

According to the survey, the percentage of companies planning to increase their pay scales was 70.7%, an increase of 6.3 percentage points from the previous year.

The share of such companies rose 8.8 points to 63.1% among small and medium-sized companies, surpassing the 3.2-point increase among large companies.

Companies planning to implement pay scale increases of 3% or more accounted for 59.8%, an increase of 23.4 points. Companies where wage increases and regular pay increases will total 5% or more reached 36.5%, almost double the previous year.

“Increasing employees’ motivation to work, improving working conditions and preventing employees from quitting” was the most common reason for wage increases, followed by “responding to rising prices” and “securing new employees.”

Meanwhile, 50.2% of small and medium-sized businesses said they had failed to pass rising labor costs into their product and service prices, partly due to a lack of understanding among their customers.

The survey also found that about 40% of companies faced labor shortages even after raising wages.

In the study, a hotel industry official said continued population decline and low wages are to blame for the labor shortage.

An official at an industrial machinery manufacturer said some flexibility is needed in working time arrangements.

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