Photo/Illutration Prices rose for bread and other products at a store in Tokyo’s Koto Ward in April. (Asahi Shimbun file photo)

Some Japanese companies are providing “inflation allowances” to help their employees cope with rising consumer prices, but industry experts and labor officials are calling for more permanent support.

Taro Saito of the NLI Research Institute said the emergency pay from the companies “helps workers’ life and maintains their motivation to work.”

However, he said that support for workers “should be reflected in their wages.”

“Since corporate performances have generally been strong, wages should be increased in the next ‘shunto’ (labor-management negotiations),” Saito said.

Kenmin Foods Co., a Kobe-based producer of rice noodles, has seen a surge in sales since  consumers started shifting away from increasingly expensive wheat products.

Company President Yuki Takamura said the higher profits are one reason he decided to provide allowances to workers in July.

Employees who had been working at Kenmin Foods for a year or more received 50,000 yen ($337), while those who worked there for less than a year were paid 10,000 yen to 30,000 yen.

The allowance was provided to all employees, regardless of whether they were regular employees or contract workers.

Takamura said he himself felt the effects of inflation when he was at a supermarket and thought, “I have to do something.”

He said he decided to provide the allowances in summer, when utility fees rise with the increased use of air conditioning. He said he is considering offering another allowance in or after winter.

According to a private research company’s estimate, rising consumer prices this year will increase the annual financial burden on a household of two or more by at least 120,000 yen from the previous fiscal year.

Major IT firm Cybozu Inc. announced in July that it would provide a one-time allowance of up to 150,000 yen to each of its 1,000 or so employees, both domestic and foreign.

Livlan Co., a Tokyo-based rental apartment developer, paid up to 100,000 yen in an inflation allowance to all employees at the end of September.

One Livlan manager said the company “did not want employees at work to be distracted by thoughts about price increases.”

Valtes Co., a Tokyo-based software testing company, has started paying a special allowance of 30,000 yen to both regular and contract employees.

The company said IT businesses are competing for the best engineers, and it hopes the allowance will improve Valtes’ chances of hiring and retaining talented workers.

The Bank of Japan at the end of October said it expects the Consumer Price Index for fiscal 2022, which ends next March, to rise 2.9 percent from the previous fiscal year.

This would be the sharpest increase in consumer prices since fiscal 1981, when there was the second oil price shock and CPI surged 4.0 percent.

Rengo (Japanese Trade Union Confederation) has said it will seek a 5-percent increase in base pay during the labor-management negotiations that start in spring.

Some companies are providing the inflation allowances on top of the workers’ monthly wages.

Since October, Eat & Holdings Co., the Osaka-based operator of gyoza restaurant chain Osaka Ohsho, has paid employees an additional 8,000 yen every month to help them deal with rising prices.

President Hiroyasu Nakata said the extra costs are adding up, but the company will continue providing the allowances.

Oricon Inc., a survey company based in Tokyo, in October started to pay its employees an extra 10,000 yen a month as an inflation allowance.

Nojima Corp., a Yokohama-based mass retailer of home electric appliances, has also paid its employees a 10,000-yen monthly allowance since July.

(This article was written by Go Takahashi, Tomohiko Kaneko and Emi Hirai.)

Related News