Fast Retailing, the Japanese giant that owns popular clothing brands Uniqlo and Theory, will start paying its employees significantly more this year.
The company announced on Wednesday that it would raise wages in Japan up to 40%, acknowledging that “pay levels have remained low” in the country in recent years.
“This will include corporate headquarters and departmental employees responsible for corporate global headquarters functions, as well as employees working in stores,” the company said in a statement.
The move comes just days after Japanese Prime Minister Fumio Kishida called on business leaders to speed up increases for workers, warning that the economy risks falling into stagflation if wage increases continue to fall below price increases.
Japan is grappling with the biggest decline in living standards in nearly a decade.
Last Friday, the world’s third-largest economy announced its worst drop in real wages in more than eight years, worsening conditions for workers already facing rising living costs.
In the capital Tokyo, core inflation, which measures items excluding fresh food, climbed 4% in December from a year ago, above the 3.8% expected by economists, according to official figures released on Tuesday.
It was “the highest on record in 40 years,” Nomura analysts said in a Wednesday report.
“Inflation in Japan is a factor in our considerations,” a Fast Retailing spokesperson told CNN on Wednesday.
But the company is generally more focused on aligning “every employee’s compensation with global standards, so we can increase our competitiveness,” the rep added.
The company will officially adjust its total compensation system in March. Starting salaries for entry-level college graduates will increase by about 18%, while new store managers could see an increase of about 36%, according to the company.
The retailer has also raised salaries for staff in some of its overseas markets, resulting in salary increases ranging from 5% to 25%, the spokesperson said.