Small, Midsize Firms Crucial For Japan's Wage Hikes: Business Leader

Small- and medium-sized enterprises (SMEs) hold the "key" to raising wages across Japan during the upcoming annual wage negotiations, the head of a prominent Japanese business lobby said, Kyodo News reported.

The remarks come as attention focuses on whether small and midsize firms, whose employees typically receive smaller raises than those at larger companies, will join the growing wage hike trend.

Speaking at a New Year’s event hosted by three major business groups, Takeshi Niinami, chairman of the Japan Association of Corporate Executives, emphasized the importance of supporting these firms, which employ approximately 70% of Japan’s workforce, in passing rising costs onto their clients. Many SMEs have hesitated to raise prices out of fear of losing business opportunities.

“Now is a critical time to establish a mechanism to consistently increase real wages,” Niinami said at the gathering, which was also attended by executives from the nation’s largest companies.

His remarks come as attention focuses on whether small and midsize firms, whose employees typically receive smaller raises than those at larger companies, will join the growing wage hike trend. Prime Minister Shigeru Ishiba’s government, which took office in October, is working to create a positive cycle of wage and price increases to bolster the economy.