Small firms are spending far more of their profits on wages than their bigger counterparts and could struggle to keep hiking pay, casting doubt on whether wage gains could broaden enough for the Bank of Japan to keep raising interest rates.
Next year's wage prospects are crucial for sustaining a consumption-led recovery — a prerequisite for further rate hikes by the Bank of Japan.
While Japan has succeeded in getting companies to finally deliver the kinds of pay hikes it has been pushing for years, the uneven corporate pay burden now complicates the BOJ's plans to lift interest rates away from historic lows.
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