Wage hikes are spreading among small companies in Japan, which account for about 70% of the country's employment, on the back of labor shortages and price increases, according to a government white paper.
At the same time, the 2024 White Paper on Small and Medium Enterprises in Japan said that such firms need to step up moves to pass on higher costs via pricing and secure sufficient funds to boost wages in order to achieve sustainable wage growth.
According to the white paper, which was adopted at Friday's Cabinet meeting, 61.3% of small companies in Japan plan to raise wages in 2024, while the price pass-through rate for such firms stood at 45.7% as of September 2023. The numbers show that many small companies are still struggling to adjust transaction prices to account for rises in raw material and other costs
The white paper also pointed out that the labor productivity of Japan is lower than that of other members in the Organization for Economic Cooperation and Development, with labor shortages becoming more serious following the COVID-19 pandemic.
There is a growing need to increase labor productivity at small companies in order for Japan to achieve economic growth that can compete internationally, the white paper said.