'It is a responsibility for private firms to lead the Japanese economy to a virtuous cycle of growth'
Employers in Japan are being urged to raise wages to continue the country's "cycle of growth" in the annual spring wage negotiations that began on Wednesday, according to reports.
The annual event, also known as shunto, sees employers and unions in Japan coming together to negotiate wages simultaneously.
"It is a responsibility for private firms to lead the Japanese economy to a virtuous cycle of growth and distribution by raising wages," said Masakazu Tokura, chairman of the Japan Business Federation, as quoted by Kyodo News.
The federation, known as Keidanren, previously urged its member companies to consider pay scale hikes.
Keidanren released on Tuesday guidelines for its member companies stressing their social responsibility to contribute to the formation of a robust middle class.
The guidelines further urged members to raise wages "in a manner appropriate to each company through sincere discussions with the labour side," The Jiji Press reported.
The business lobby further called on organisations to recognise the importance of structural wage increases for small and midsize companies, as well as improving working conditions for fixed-term staff.
A survey from the Japan Centre for Economic Research among 35 economists revealed that Japan's big firms are expected to offer unions a 4.74% average wage hike in 2025, The Business Times reported.
It falls short of the wage hikes sought by Rengo, the Japanese Trade Union Confederation, which is at least five per cent, and six per cent for smaller firms.
"We have to make sure pay increases spread to every corner of the country, including regional economies and small and medium-sized enterprises," said Tomoko Yoshino, the head of Rengo, as quoted by Kyodo News.
This focus on smaller firms comes after they only offered an average pay increase of 3.62% in last year's annual wage talks, according to the Japan Chamber of Commerce and Industry.
It is much lower than the average monthly wage increase of 5.58% offered by larger firms last year, according to Kyodo News, citing a Keidanren tally.
The 5.58% wage hike is also the first time that the five-per-cent mark was surpassed in 33 years.
