Wage increases are spreading among small businesses in Japan, which account for about 70% of the country’s employment, due to labor shortages and price increases, a government white paper said.
At the same time, the 2024 White Paper on Small and Medium Enterprises in Japan stated that such companies should step up to pass on higher costs through pricing and secure sufficient resources to boost wages to achieve sustainable wage growth.
According to the white paper, which was adopted at Friday’s cabinet meeting, 61.3% of small businesses in Japan plan to increase wages in 2024, while the price pass-through rate for such businesses stood at 45.7% in September 2023. The figures show that many small businesses are still struggling to adjust transaction prices to the increase in raw material and other costs
The white paper also pointed out that Japan’s labor productivity is lower than that of other members of the Organization for Economic Co-operation and Development, with labor shortages becoming more severe due to the COVID-19 pandemic.
There is a growing need to increase labor productivity in small businesses so that Japan can achieve economic growth that can compete internationally, the white paper said.
