Japan’s small firms, which employ the bulk of the nation’s company employees, may have trouble sustaining wage growth as the Middle East conflict drives up input costs and squeezes profit margins, putting a key pillar of growth at risk.
More than 80% of unions affiliated with the Japanese Federation of Energy and Chemistry Workers’ Unions (JEC) said the impact of the Iran war will likely affect future wage talks, according to a survey conducted by the group last week. Some 84% reported already feeling the effects, most commonly through higher energy and raw materials costs.
The survey results add to concerns over the durability of the nascent virtuous cycle of wage growth supporting consumption and prices. Japan’s corporate goods prices rose 0.9% in May from a month earlier, one of the strongest paces in recent years. That followed April data which climbed at the fastest clip in 12 years.
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.