TOKYO, July 12 Reuters Momentum to raise wages has been spreading among small and medium firms in Japan this year, reflecting labour shortages and efforts to help employees tackle an inflationary squeeze, a central bank survey showed on Friday.

According to the Bank of Japan39;s survey on regional small and medium firms, labour shortages are now perceived as being here to stay, and the need for continued wage hikes is being recognised widely.

While many firms still find it difficult to pass rising labour costs to prices, there is a growing movement to implement or consider such price hikes, especially in industries where labour shortages are severe, the survey said.

Such momentum among small and medium firms, where wage growth typically lags behind that of big companies, could set the stage for another interest rate hike by the central bank.

According to the nation39;s largest union Rengo, workers39; monthly pay will rise 5.10 on average this fiscal year, the biggest wage hikes in three decades.

Rengo, which has about 7 million members, said big firms with 300 or more unionbacked employees raised wages by 5.19, while small firms increased pay by a smaller 4.45.

Reporting by Makiko Yamazaki; Editing by Kim Coghill and Miral Fahmy

Source Reuters