Pay hikes at small firms in focus at Japan’s spring wage negotiations

With Japan aiming to finally achieve a healthy wage-price cycle, policymakers are keenly watching this year’s spring pay negotiations, which kicked off last week.

Large firms are expected to hike wages even more this year, and so the focus is on smaller firms, as about 70% of Japan’s workers are employed by such enterprises.

“Small and midsize firms employ a considerably larger number of workers (compared with big companies) … so the wage hike trend among those businesses will be really important to see whether the pay increase trend will spread across Japan,” said Tatsuhiko Nakanobu, an economist at Mizuho Research & Technologies.