Japan big firms offer biggest pay rise in decades
Focus on whether SMEs follow suit to raise wages
SMEs hold key to broader, sustainable wage hikes
Wage hikes must continue to stoke virtuous growth

TOKYO, May 1 Reuters Rising inflation and an intensifying labour crunch are prodding smaller local Japanese firms to follow their big counterparts in raising pay, a move that can generate broader wage hikes and encourage the central bank to phase out its massive stimulus.

Wages have barely risen in Japan since the asset bubble burst in the 1990s but have crept up recently, as companies face pressure to compensate employees for the rising cost of living.

Importantly, smaller firms are also starting to raise pay even as many of them face a margin crunch. A durable rise in wages is an important consideration for policymakers who seek to foster sustainable demanddriven inflation in the world39;s thirdlargest economy before starting to unwind monetary stimulus.

Huis Ten Bosch Co is just the kind of company that policymakers would want to see more of to stimulate a virtuous cycle of wages, prices and economic growth.

The theme park operator in southern Japan unveiled a plan last month to hike pay by 6 in the financial year 2024 a rare move to preempt wage hikes for the next year.

Customers have returned to prepandemic levels. Moreover, we want to give staff a sense of security in the face of rising living costs, Yu Ito, spokesperson at the park operator39;s president…