Fast Retailing, owner of the Uniqlo clothing chain, announced it would hike wages by up to 40% for some roles on Wednesday.
That could be good news for Prime Minister Fumio Kishida and central bank governor Haruhiko Kuroda, who both want Japan Inc to sharply increase salaries this year to offset rising import costs and boost consumption, which would in turn help justify normalising Japan’s unsustainably low interest rates.
The bigger question, though, is how much of an outlier Fast Retailing will be. Although Japan’s labour market is tight, weak growth and rising prices have caused real wages to contract for eight consecutive months through November.
Analysts cited by Reuters expect companies to offer annual rises of just 2.7% during the spring season, a traditional negotiation period. That’s a full percentage point below November’s consumer inflation excluding fresh food.
Fast Retailing, set to announce earnings on Thursday, was a market outperformer last year and is preparing a three-one stock split.
On the other hand Nomura analyst Hidehiko Aoki expects the company to report that net income fell 3.5% in last quarter, and that was before the wage hike announcement. Shares have flattened out since August. Hopefully Uniqlo’s raises won’t look over-generous.
