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Japan’s annual wage negotiations (“shunto”) between unions and employers resulted in an average wage increase of 3.8 percent, a 30-year record, according to preliminary results announced today by the Rengo trade union confederation. .

This result for the next fiscal year 2023/24 (which starts on April 1) is clearly above economists’ expectations and could potentially encourage the Bank of Japan (BoJ) to ease its always very accommodative monetary policy .

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Wages have risen very little each year in Japan for more than two decades as unions have preferred to emphasize job security over wage demands, even as consumer prices have remained nearly stagnant in the archipelago.

But inflation has also picked up in Japan since last year, driven mainly by a spike in energy prices, and climbed to 4.2% excluding fresh goods in January, a level not seen since 1981.

Prime Minister Fumio Kishida’s government also called on Japanese businesses to give wage increases to minimize the impact of inflation on purchasing power, while Japanese consumers are also bearing the brunt of the yen’s fall since last year.

The preliminary results of the “shunto” concern wage negotiations in large Japanese companies.

The big question going forward is whether the country’s small and medium-sized enterprises, which make up 70% of assets, will follow suit, given that they are generally less able than large groups to absorb their cost increases in selling prices their.