Fast Retailing (Uniqlo) raises salaries sharply in Japan
Sylvie Claire / January 12, 2023
Japanese clothing giant Fast Retailing, owner of the Uniqlo brand, announced Wednesday that it will raise the salaries of its permanent employees in Japan by up to 40 percent, bringing them more in line with international levels.
Salaries are relatively low in Japan, even for senior executives, making the country unattractive to foreign talent. The fall of the yen against the dollar and the euro last year has further exacerbated this problem.
Fast Retailing plans to thoroughly reform its salary system in Japan from March "to better compensate each employee according to his or her ambition and skills, and to increase the growth potential and competitiveness" of the company, according to a statement.
This measure will affect about 8,400 employees on permanent contracts, a spokeswoman for the group told AFP.
Of Fast Retailing's approximately 48,000 other employees in Japan, who often have more precarious contracts, 41,000 people have already seen their hourly wages increase by an average of 20% since last September, the spokeswoman added.
Fast Retailing expects these wage hikes to increase its personnel expenses in Japan by about 15%. But the group hopes to absorb the extra cost through productivity gains, the spokeswoman said.
Fast Retailing should thus be well received by the Japanese government, which has long been calling on Japanese companies to seriously increase their salaries to mitigate the impact of inflation and the fall of the yen on purchasing power.
Against the backdrop of soaring energy prices and imported food products, the increase in consumer prices reached 3.7% last November in Japan, the first time this has happened in the archipelago since 1981. However, the Bank of Japan (BoJ) expects inflation to weaken significantly this year, as wage increases are not sufficient to generate a virtuous economic circle.
However, Fast Retailing is likely to remain a rare counter-example in Japan.
Rengo, the Japanese trade union confederation, is hoping to achieve an average 5% wage increase in the next round of negotiations with management each spring.
But for many economists, this target - the highest in 28 years - is highly unlikely to be achieved, and a 3% increase would already be a success.