Photo/Illutration One of Fast Retailing Co.’s Uniqlo clothing stores in London (Asahi Shimbun file photo)

Fast Retailing Co. announced a large pay hike for its employees on Jan. 11 as part of its efforts to become a global company.

The operator of the Uniqlo clothing stores will raise the salaries of its full-time employees by as much as 40 percent from March. The hike is intended to bring the pay scale of Japanese employees in line with employees at Fast Retailing offices and stores overseas.

In the global apparel market, Fast Retailing ranks third behind Spain’s Inditex, which operates the Zara clothing stores, and Sweden’s H&M clothing stores in terms of sales.

The average annual salary of Fast Retailing’s domestic employees is 9.59 million yen ($73,000). While by no means low for a Japanese company, the figure pales in comparison to its foreign rivals.

And with plans to further expand abroad, Fast Retailing executives felt that raising the pay of their domestic employees was a necessity. 

By bringing the pay scale of its domestic staff to equal overseas employees, Fast Retailing can transfer foreign employees to its Japanese offices and stores, as well as move domestic workers abroad.

About half of Fast Retailing’s annual sales come from abroad, and it has close to double the number of overseas stores compared to domestic stores.

A record net profit of 273.3 billion yen for the year ending in August 2022 also gave Fast Retailing the luxury of announcing the pay hike at this time. 

Other major companies have also made moves to raise the salaries of their employees, not only to secure needed personnel in a tight labor market, but also to support workers facing a surge in consumer prices mainly due to Russia’s invasion of Ukraine last year.

Canon Inc. raised the base pay of its employees this month, the first such hike in 20 years. Its 25,000 or so employees will have a total increase in their salaries of about 3.8 percent.

Major plant construction company JGC Holdings Corp. will implement a pay hike of about 10 percent from April for about 3,000 group company employees.

Some companies are moving up pay hikes scheduled from this spring or later.

Secom Co., a leading security service provider, raised its base pay in November rather than wait for the traditional “shunto” spring labor offensive.

IwaiCosmo Holdings Inc., a securities firm, also moved up its scheduled July pay hike by six months.

And while both labor and management representatives have said they want to implement wage hikes in this year’s shunto, it remains to be seen how extensive that increase will be.

Rengo, the Japanese Trade Union Confederation, has set a pay hike target of about 5 percent for its member unions.

Keidanren (Japan Business Federation) is calling on member companies to implement pay increases that will match the surge in consumer prices.

But in recent years, the average wage hike has been about 2 percent. With companies, especially smaller ones, still facing higher prices for the materials they use in manufacturing, it may not be easy for many to raise salaries like some of the major companies.

(This article was written by Yoko Masuda, Kohei Kondo, Ayumi Sugiyama, Kanako Tanaka and Jumpei Miura.)

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