The average wage increase rate per worker for 2023 was 3.2 percent, the highest since the current survey method began in 1999, according to a survey released by the labor ministry on Nov. 28.

The rate rose by 1.3 points from the previous year.

The survey included companies that do not have labor unions, revealing that wage increases are spreading even in businesses where wage negotiations with labor unions are not an option.

The labor ministry conducted the survey among companies with 100 or more regular workers from July to August, with 1,901 companies responding.

The ministry estimates that around 80 percent of the companies who responded do not have labor unions.

For the first time, the wage increase rate reached the 3 percent range. The actual increase amount was 9,437 yen ($64) in average, up 3,903 yen from the previous year.

Large companies with 5,000 or more regular workers had a wage increase rate of 4 percent.

Small and midsize companies with 100 to 299 employees, of which an estimated 90 percent do not have labor unions, saw a 2.9 percent wage increase rate. This was a significant jump of 1 point from the previous year.

The average wage increase rate in this year’s spring “shunto” wage negotiations between Japanese companies and their labor unions was 3.6 percent, according to the ministry. That marked a year-on-year increase of 1.4 points.

Compared to this, the latest survey shows that even many small and midsize companies without labor unions are raising wages.

Among the factors considered most important for wage increases, “price trends” saw the most significant surge at 7.9 percent, compared to the previous year at 1.3 percent.

However, real wages have been declining for 18 consecutive months as prices rose faster than pay raises, according to the monthly labor statistics survey.

SMALL BUSINESS OWNERS STRUGGLING

Even small and midsize companies that account for more than 90 percent of all companies are raising wages. However, they are struggling to secure the funds for wage increases.

Many are deemed to be in a weak bargaining position and have been unable to fully pass on the rising costs of raw materials and labor expenses.

At an auto parts manufacturer in Kanto region, the company president decides on the amount of wage increases every April.

The company does not have a labor union and does not employ a wage scale that factors in age and years of experience for wage increases. So, wage adjustments are made based on business conditions.

This year, the company decided to raise basic salaries by an average of 7,000 yen, up 4,000 yen from the previous year.

But the president feels the increase fell short amid the rising costs of utilities and groceries, saying, “I wanted to raise (wages) more, but I also need to consider our financial capability, right?” It was a difficult decision.

The company has around 100 employees and serves as a second-tier subcontractor that receives orders from a major parts manufacturer.

Soaring gas and electricity costs have been squeezing profits.

In 2020, the company requested a product price increase from the major manufacturer it conducted business with, but the manufacturer was hesitant to agree.

Nevertheless, the subcontractor persisted in the request.

Two years later, the major manufacturer finally agreed to raise product prices.

Even since then, electricity costs have continued to rise, however, the subcontractor is not planning to request further price increases for a while.

“If we say it every time, we’ll get a negative reaction. There are things we want to say but cannot,” the president said.

The subcontractor has not yet requested an increase in labor costs because it heard that a similar company who requested it was told by the major manufacturer, “That’s your problem, isn’t it?”

According to a survey released by the Japan Chamber of Commerce and Industry in October, 55.3 percent of companies were able to pass on 40 percent or more of the increase of the costs.

The companies that were able to transfer 40 percent or more of the increase of the labor costs totaled 34.7 percent.