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Tokyo (AFP) – Japanese clothing giant Fast Retailing, owner of the Uniqlo brand, announced on Wednesday that it will raise the salaries of its permanent employees in Japan by up to 40%, to bring them more in line with international levels.
Salaries are relatively low in Japan, even for senior executives, which makes the country unattractive to foreign talent. The fall of the yen against the dollar and the euro last year has further aggravated this problem.
Fast Retailing intends to overhaul its salary system in Japan from March “to better compensate each employee according to their ambition and skills, and to increase the growth potential and competitiveness” of the company, according to a communicated.
This measure will affect around 8,400 employees on permanent contracts, a spokeswoman for the group told AFP.
Among the approximately 48,000 other employees of Fast Retailing in Japan, who often have more precarious contracts, 41,000 people have already seen their hourly wages increase by 20% on average since last September, added this spokesperson.
Fast Retailing expects these wage hikes to boost its payroll spending in Japan by around 15%. But the group hopes to absorb this additional cost through productivity gains, according to the spokesperson.
Fast Retailing should thus be well regarded by the Japanese government, which has long called on Japanese companies to seriously increase their wages to mitigate the impact of inflation and the fall of the yen on purchasing power.
Against the backdrop of soaring prices for energy and imported food products, the increase in consumer prices reached 3.7% last November in Japan, the highest level in the archipelago since 1981. The Banque du Japan (BoJ), however, expects inflation to weaken markedly as of this year, for lack of sufficient wage increases to generate a virtuous economic circle.
However, Fast Retailing risks remaining only a rare counter-example in Japan.
Rengo, the Japanese trade union confederation, hopes to obtain an average wage increase of 5% during the next negotiations with the employers taking place each spring.
But for many economists, this objective – the highest for 28 years – has very little chance of being reached and a 3% rise would already be a success.
© 2023 AFP