Inflation, labour crunch push firms to raise pay

Rewarding employees: A customer shops at a store in Sapporo. Nearly 60% of Japan’s SMEs plan to lift wages this year with about 20% aiming for a hike by 4% or more. — Bloomberg

TOKYO: Rising inflation and an intensifying labour crunch are prodding smaller local Japanese firms to follow their big counterparts in raising pay, a move that can generate broader wage hikes and encourage the central bank to phase out its massive stimulus.

Wages have barely risen in Japan since the asset bubble burst in the 1990s but have crept up recently, as companies face pressure to compensate employees for the rising cost of living.