Pressured by rising prices and a labor crunch, Atsushi Tanaka has succumbed to what the administration of Prime Minister Fumio Kishida has been pushing for: wage hikes.

In March, the president of a medical parts manufacturer will be raising the monthly salaries of his full-time workers by ¥15,000 ($114) while also increasing the hourly wage for his part-timers.

It wasn’t an easy decision to make for Tanaka, whose family-owned company is based in Ibaraki Prefecture, northeast of Tokyo. Raw material prices have been rising and soaring energy costs have seen electricity bills double at his factories. With more than 100 full- and part-time staff on the roster, the pay hikes will cost Tanaka’s firm, Sanetsu, an extra ¥20 million or so annually.