more than half a century, Japan’s corporate giants have held annual negotiations with labor unions to decide pay increases for the year ahead. Never have those talks meant so much to so many beyond the workers themselves.
This year, the outcome matters to bond investors, stock traders and anyone, really, with anything at stake in the country. That’s because wage growth will continue to be a key factor for the Bank of Japan’s policy under Kazuo Ueda, who is expected to replace Haruhiko Kuroda as governor in April. Kuroda made 3% wage growth a precondition to ending years of ultraeasy monetary policy.
And when that happens, it’s likely to have a major impact on markets, companies and the economy itself.
Unions file wage demands to firms every February in an annual wage negotiation known as the shuntō, or "spring offensive.” After weeks of talks, large companies typically announce their decisions around mid-March, followed by smaller firms before the start of the financial year on April 1.
Goldman Sachs Group predicts an average pay hike of 2.8% this year, which would be the highest since 1997. But that’s still short of the 3% level that Kuroda says is necessary to tighten monetary policy.
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