TOKYO -- Japanese workers appear headed for their biggest wage increase

in two decades as companies led by the logistics and retail sectors compete
for a slice of the country's ever-shrinking workforce.

Businesses lifted wages by an average of 2.41% this year, according to data

collected by Nikkei as of April 3. This raise -- made up of base pay and
automatic, seniority-based pay -- topped last year's average increase by 0.35
percentage point, the first such growth in three years.

In value terms, monthly pay rose by an average of 7,527 yen ($70), also the
highest since 1998.

Rising wages in Japan usually are driven by manufacturers. But

nonmanufacturers have taken the lead this year for the first time since 1997.
They increased pay by 2.79%, their biggest hike in 21 years and more than
half a point above the raises from manufacturers.

Logistics providers and service industry players in particular are working

harder to attract employees. Yamato Transport agreed to the full 11,000-yen
increase in monthly base pay, or 3.64%, requested by the Yamato
Holdingsunit's labor union during annual wage negotiations.

The logistics sector enacted an average pay raise of 3.39%, the highest
across all industries and the only one with an average increase exceeding
10,000 yen. The industry is struggling to keep pace with the surge in
demand for e-commerce shipments.
A Life Corp. supermarket in central Tokyo. The grocery chain will raise wages for both full-time and part-time
workers. (Photo by Takuya Imai)

Department stores and supermarkets raised wages by 2.53%. Grocery store

chain Life Corp. will raise salaries for full-time employees by 3.86%, while
also pledging to increase wages for part-time workers.

Manufacturers boosted pay by 2.27%, just 0.18 point more than in

2017. Toyota Motor, which likely posted a record net profit for the fiscal
year ended in March, has agreed to a 3.3% pay raise but is not releasing
specific yen figures.

Many big electronics makers such as Hitachi and Panasonic are offering just
1,500 yen more in base pay this year. Sony, which is not part of
industrywide negotiations with unions, decided on a 5% increase to final
yearly pay as the company hopes to attract experts in artificial intelligence
and other technologies to boost its competitiveness.

Yet Japanese wages continue to fall in real terms due to rising food and oil
prices. The government has urged companies to boost pay for the past five
years, and Prime Minister Shinzo Abe gave a specific target for the first time
this year, calling for 3% raises.

Businesses are catching on, primarily because they need to secure the talent
to compete on the global stage. Many companies are switching away from a
seniority-based wage structure and raising starting salaries.

Competition for workers is particularly fierce in the technology sector. Job

postings for data scientists have quadrupled in a year, recruitment services
provider en-japan said. Companies from China and elsewhere also are
luring Japanese graduates away with generous offers.

Some companies are focusing on seniors to overcome labor shortages. West

Japan Railway and farm equipment maker Kubota are including post-
retirement hires 60 and older in their pay increases. Honda Motor pushed
back its retirement age last year and raised pay for senior employees.