Uniqlo to raise Japan staff wages by up to 40% amid cost of living crisis

The Japanese fashion chain Uniqlo will raise the pay of its full-time employees in its home country by up to 40 per cent as Tokyo faces the highest inflation in four decades.

Fast Retailing, Uniqlo’s parent company, said there was an “urgent need” to raise pay in Japan, where salaries have remained low in comparison with overseas operations.

It comes as inflation in the country is soaring at the fastest rate since 1982, rising up to 3.7 per cent in November.

Concerns were also being raised as the average wage in the third-largest economy of the world remains at the lowest level of the G7 nations, causing stagnation in its economic growth for decades. The annual average pay in Japan was $39,711 in 2021, well below the OECD average of $51,607.

It was the first time in at least 20 years that the company, which operates more than 3,500 clothing stores worldwide, revised remuneration across its entire group, said spokesperson Pei Chi Tung.

The company said “in order to remunerate each and every employee appropriately for their ambition and talents, as well as increase the company’s growth potential and competitiveness in line with global standards”.

Under the revised remuneration, the monthly salary of recent university graduates would rise from 255,000 yen ($1,926) to 300,000 yen ($2,300), marking an almost 18 per cent increase.

The new store manager will have their pay increase up to 35 per cent in their first or second year of employment.

“Going forward, the new remuneration of each employee will be decided by globally aligned grade criteria” based on their work performance and results as well as their contribution to the business, Fast Retailing said.

Uniqlo is the latest to join other domestic businesses, such as Nippon Life Insurance and Suntory Holdings, to raise wages as the cost of living crisis has hit Japan, leading to an unprecedented rise of prices of commodities from food to fuel.

It comes as Japanese prime minister Fumio Kishida repeatedly called for companies to increase wages of employees, a plea that has gained urgency as prices have soared.

“There are alarm bells warning that stagflation emerges if wage growth lags behind price hikes,” Mr Kishida said on New Year to businesses.

The Japanese economy shrank for the first time in a year, official figures published in November showed, as gross domestic product unexpectedly declined by 1.2 per cent in the three months ending September.