Japanese pay rises have two parts. The step increase, teiki shokyu, moves an employee one notch up a salary table that already exists, so a 30-year-old earns what last year's 31-year-old earned. A base-up shifts the whole table upward, so every grade pays more than it did. Only a base-up raises the company's total pay bill for a workforce of the same age profile.
For most of the period from the late 1990s to 2022, base-ups were small or zero, and the headline pay rise was little more than the step increase. That changed with inflation. In 2026, Rengo's final spring tally, published in July, put the average rise at 5.01%, the third year in a row above 5%, with the base-up portion around 3.5%. Smaller unions came in lower, at 4.69% overall.
Base-ups are negotiated with the enterprise union in the spring wage talks and usually take effect in April. Companies without a union often follow the published results of their industry.
What it means for a foreign employer
- Read the headline correctly. A "5% pay rise" in Japanese reporting includes the step increase. If your merit budget is 3%, your staff may be falling behind the domestic market.
- Your table may be stale. Japanese competitors have lifted entry and mid-level pay several years running. Salary bands set in 2022 are probably too low for mid-career hires now.
- Expect the question. Candidates and employees ask whether you do base-ups. Have an answer, even if your system is merit-only.
- Consider timing. Japanese peers adjust pay in April. Reviewing pay in January or July means your offers can lag the market for part of the year.
Sources
- Rengo (Japanese Trade Union Confederation), 2026 spring wage negotiations, final tally, 3 July 2026.
- Jiji Press and Bloomberg reporting on the Rengo final tally, July 2026.