In Japan, around 70% of companies will be implementing salary scale increases for the fiscal year 2024, according to a survey conducted by the Finance Ministry. The survey, which was conducted from March to this month, gathered responses from approximately 1,100 companies across Japan. The findings indicate that 70.7% of the surveyed companies intend to raise their pay scales, marking a 6.3 percentage point increase compared to the previous year. Notably, the proportion of small and medium-sized firms planning to increase their pay scales rose significantly by 8.8 points to 63.1%, outpacing the 3.2-point increase observed among large companies.
The survey also revealed that 59.8% of companies plan to implement pay scale increases of 3% or more, a substantial increase of 23.4 points. Additionally, 36.5% of companies anticipate that their combined pay scale hikes and regular pay increases will total 5% or more, reflecting a near doubling from the previous year’s figures.
When asked about their reasons for implementing pay increases, the most common response was to enhance employee motivation and improve working conditions. This was followed by the need to address rising prices and secure new employees.
However, the survey also highlighted some challenges faced by companies. Approximately 50.2% of small and medium-sized firms reported that they have been unable to fully pass on rising labor costs to their product and service prices, partly due to a lack of understanding from their clients. Furthermore, around 40% of firms continue to struggle with labor shortages despite raising wages. One hotel industry official attributed this to the ongoing decline in population and low wages, while an industrial machinery maker emphasized the need for greater flexibility in working hour regulations.
