The plan affects around 8,400 people, both at Fast Retailing headquarters and at the company’s stores. Starting monthly salaries will increase to ¥300,000 (US$2,270), from ¥255,000 currently. Salaries for new store managers, who typically have been at the company for a year or two, will rise to ¥390,000 from ¥290,000.
Fast Retailing raised starting pay in 2020 for certain full-time workers. But this will be the Japanese company’s first blanket hike since adopting its current compensation scheme over two decades ago.
The retailer also increased hourly wages for part-timers by an average of around 20% in September.
Fast Retailing assigns employees to one of around 20 pay grades depending on their ability, achievements, ambitions and other factors. As part of the upcoming change, the company will set a base pay for each category, scrapping additional benefits currently granted to Japanese employees based on their title and location.
Overall, the changes are expected to increase the fashion retailer’s labour costs in Japan by around 15%.
Fast Retailing hopes to send more employees trained in Japan overseas – and vice versa – by standardising pay worldwide, and by bringing wages in Japan closer to international standards.
The retailer focused on markets beyond Japan as it grew into the world’s third-largest clothing company. Uniqlo’s global operations were responsible for half of the group revenue and made more in operating profit than the brand’s domestic counterpart for the fiscal year that ended in August.
Fast Retailing’s move could encourage more Japanese companies to follow suit as they pursue global talent.
Average pay at 3,213 publicly traded businesses in Japan totalled ¥6.05 million in fiscal 2021, Tokyo Shoko Research found. Only 110 companies averaged ¥9 million or more.
Managerial staff in the US made double the pay of those in Japan as of December, human capital consultancy Mercer said. Managers in China outearned their Japanese counterparts as well.
The average Fast Retailing employee in Japan earns ¥9.59 million a year, making the company one of the country’s highest-paying retailers. But the figure remains low compared with pay at trading houses and foreign-owned companies, or with businesses overseas.
Prime Minister Fumio Kishida has urged Japan’s business sector to lift pay by more than the inflation rate during annual labour negotiations this spring. The Japanese Trade Union Confederation, the country’s top labour organisation known as Rengo, is aiming for a roughly 5% hike.