Fast Retailing, Asia’s largest clothing retailer and owner of the Uniqlo fashion brand, will raise employee wages in Japan by as much as 40 per cent as inflation in the country rises at its fastest pace in decades.
The sharp jump in remuneration follows Prime Minister Fumio Kishida’s calls on Japanese businesses to raise wages that have remained stagnant for decades, with companies struggling to transfer higher costs to consumers.
In a statement made on Wednesday, Fast Retailing said the pay rise — set to take effect from March — was aimed at making the group’s remuneration system more globally competitive. While many Japanese firms rely on a seniority-based pay structure, the company would evaluate employees based on their performance and ability to contribute to the business, it added.
As a result of the revision, starting monthly pay for university graduates will increase to ¥300,000 ($2,270) from ¥255,000, while salaries for new store managers will rise from ¥290,000 to ¥390,000.
“For other employees, the company plans to increase annual salaries by as much as 40 per cent,” Fast Retailing said. “Going forward, the new remuneration of each employee will be decided by globally-aligned grade criteria.”
Japan’s core inflation, which does not include volatile fresh food prices, rose by 3.7 per cent in November, its fastest pace in nearly 41 years. That has increased expectations on the traditional “shunto” wage negotiations in the spring, with the government calling on businesses to increase pay to compensate for higher prices.
In a sign of changing times, during the spring negotiations the Japanese Trade Union Confederation is seeking a 5 per cent year-on-year increase in wages, or 3 per cent in terms of base pay, which would be the highest rise since 1995.