Japan’s civil servants are set to receive the biggest pay increase in 34 years, a move that could further reinforce the virtuous cycle of wage and price growth long sought by the Bank of Japan as a precondition for continuing monetary tightening.
The National Personnel Authority recommended Thursday a 3.62% increase in average monthly base pay for public employees in the current fiscal year. This would mark the largest rise since 1991 and, when combined with an automatic bump that already kicked in, bring their total wage gain this year to 5.1%. The change will affect roughly 280,000 workers, according to a government official.
The rise in public sector wages will come as a welcome development for policymakers at the BOJ who are seeking broad-based and lasting wage growth to support stable inflation. BOJ Gov. Kazuo Ueda recently reiterated the importance of confirming the "positive mechanism” linking wages and prices when assessing the appropriate timing for the next possible rate hike.
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