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

Yomiuri Shimbun file photo
The headquarters of the Ministry of Finance in Tokyo.

Tokyo, April 22 (Jiji Press) – About 70 percent of companies in Japan will implement wage increases in the 2024 fiscal year, a Finance Ministry survey showed on Monday.

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

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

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

“Increasing employee 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 workers.”

Meanwhile, 50.2 percent 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 percent 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.

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

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