Japan

Intelligence for Better Decision Making

Keidanren Issues 2026 Guidelines Calling for Standardized Base Pay Increases in Spring Wage Negotiations

Jan. 22, 2026 | Firms

Japan’s leading business federation Keidanren has issued its 2026 spring labor-management negotiation guidelines, urging companies to adopt base pay increases as the standard approach to wage growth.

**The guidelines shift from the 2025 report’s suggestion to merely consider base pay raises, recommending instead that firms take a medium- to long-term perspective on wage growth to secure positive real wages amid rising prices and interest rates.**
Chair Hitoshi Nagasawa stressed that raising workers’ wages will strengthen the Japanese economy, even as US tariffs and strained relations with China create external challenges. Keidanren pledges to promote wage increases, including base-up adjustments, provided no major crisis emerges, and emphasizes that companies can differentiate pay hikes according to job roles and individual contributions.

**In 2025 spring negotiations, large companies achieved an average wage increase of 5.39 percent, and Keidanren expects comparable or higher gains in 2026.**
Yet real wages have fallen for eleven consecutive months through November 2025, showing that nominal wage gains have not kept pace with inflation. Companies and government alike will need to pursue substantial pay rises alongside measures to curb price inflation.

**Recognizing that small and medium-sized enterprises employ roughly seventy percent of Japan’s workforce, the guidelines call for concrete steps to sustain wage growth in these firms.**
Keidanren urges large companies to support their SME suppliers through fair price negotiations and to assist them in personnel management and digitalization efforts, ensuring costs can pass through the supply chain.

Nagasawa expressed concern that cost pass-through remains inadequately implemented, and he urged companies to establish proper mechanisms to maintain momentum in wage increases and support economic stability.

**The 2026 spring labor offensive begins on January 27 with a meeting between Keidanren and Rengo chairmen.**
Keidanren notes that average wage increases at large firms have risen from 3.99 percent in 2023 to 5.58 percent in 2024 and 5.39 percent in 2025, even as real wages declined by 2.8 percent year-on-year in November 2025. This gap reflects the ongoing mismatch between wage growth and inflation.

**Aligning with Prime Minister Sanae Takaichi’s call for a third consecutive year of around five percent wage hikes, Keidanren reaffirms its role in sustaining this momentum.**
While large companies have led substantial increases, SMEs have recorded average hikes of around four percent and now face signs of “wage-increase fatigue” as labor costs rise.

**To reverse the decline in real wages, the guidelines urge large firms to engage in good-faith price negotiations with SME contractors and reference the newly enacted Toritsugi Act, which mandates proper subcontracting transactions and prohibits unilateral price setting without consultation.**
Keidanren views these measures as essential to improving the business environment for SMEs and stabilizing overall wage growth around five percent.

**In its January 20, 2026 guidelines, Keidanren committed to leading this year’s spring wage negotiations in line with the Japanese Trade Union Confederation’s target of at least five percent increases.**
The federation also proposed weighting pay hikes more heavily toward individual contributions, providing fixed-amount payments to all workers, and granting larger increases to younger employees.

Heavy Snowfall Disrupts Transportation and Power in Japan’s Sea of Japan Coastal Regions

Jan. 22, 2026 | Transportation & Logistics

Strong cold air flowing across Japan is set to drive heavy snowfall along the Sea of Japan coast from the northern to western regions through late January 2026.

**The Japan Meteorological Agency projects that this strong cold air will persist until around January 25, 2026, producing heavy snow primarily along the Sea of Japan coast.**
Beginning January 22, snowfall will intensify in the Hokuriku and San’in areas, and even locations on the Pacific side that rarely see snow may record significant accumulations.

Above eastern Japan, temperatures at roughly 5,000 meters may fall below –40 °C, while western Japan could see readings below –12 °C at about 1,500 meters, creating conditions that support heavy snowfall in lowland coastal zones.

**Snowfall rates have already reached as much as 24 centimeters in six hours in some areas.**
Forecasts through Friday morning call for total accumulations up to 100 centimeters in Hokuriku and Niigata Prefecture, with 30 to 70 centimeters expected across Tohoku, Kinki, Hokkaido, Tokai, and Chugoku. In addition, bands of heavy snow clouds tied to the Japan Sea polar air mass convergence zone may extend snowfall into typically clear flatlands and Pacific coast areas.

**Heavy snow may disrupt road networks and force traffic closures to prevent vehicle stranding.**
Overhead power lines could suffer outages from snow loading, and mountainous terrain faces elevated avalanche hazards. Starting January 22, authorities plan preventive closures on several expressway sections in Gifu Prefecture and neighboring areas, including the Meishin Expressway between Ritto Konan (Shiga) and Ichinomiya (Aichi), the Tokai-Kanjo Expressway from Yoro to Minoseki (both in Gifu), and the Hokuriku Expressway between Maibara (Shiga) and Tsuruga (Fukui). Some national routes may also close depending on snowfall severity.

**Officials from the Chubu Regional Development Bureau and the Nagoya Local Meteorological Observatory strongly urge the public to avoid nonessential travel, secure necessary supplies, and consider rescheduling plans as conditions warrant.**

Monitored Intelligence for Japan - Jan. 23, 2026

News
Media
386

Government
Releases
55

City/State
Releases
128

Embassy
Releases
1

Foreign
Service
Advisories
0

Academic/
Think
Tank
19

Podcasts
0

Videos
0

Social
Media
0

Business
Releases
1

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金利上昇でも続く円安日銀、物価高止まりを警戒

Yen Weakness Continues Despite Interest Rate Hikes as Bank of Japan Warns of Persistent High Inflation

Tokyo Shimbun | Local Language | News | Jan. 23, 2026 | UndeterminedInflation

The yen continues to weaken against the US dollar despite rising long-term interest rates in Japan and the Bank of Japan's warnings about persistent high inflation. Although the Federal Reserve is cutting rates, narrowing the interest rate gap between the US and Japan, the expected yen strengthening has not occurred. This is attributed to growing concerns over Japan's worsening public finances, which are driving ongoing yen selling in the foreign exchange market.

On January 21, long-term interest rates on Japanese government bonds closed at 2.285%, over 0.6 percentage points higher than in early October 2025, before Prime Minister Sanae Takaichi took office. Typically, such increases in interest rates would support yen appreciation, but this correlation is breaking down due to a lack of confidence in Japan's fiscal health. The Liberal Democratic Party’s upcoming election platform includes a pledge to consider exempting food and beverage items from consumption tax for two years, a move that risks undermining fiscal credibility even if it is not implemented.

Overall, persistent inflation risks and fiscal concerns are leading to continued yen weakness despite conventional factors that would normally strengthen the currency. The uncertainty ahead of the February 8 House of Representatives election is contributing to investor wariness in the currency and bond markets.

UK PM Starmer likely to meet with PM Takaichi in Japan next week

NHK | English | News | Jan. 23, 2026 | UndeterminedPolitics and Elections

British Prime Minister Keir Starmer is expected to meet with Japanese Prime Minister Takaichi Sanae in Japan during the latter half of next week. This will be Starmer's first visit to Japan since taking office, with arrangements for the trip currently underway according to multiple Japanese government sources.

The leaders are anticipated to focus on enhancing cooperation in economic security and defense, including discussions on strengthening supply chains. Prior to visiting Japan, Starmer plans to travel to China. The meeting will likely include exchanges on issues related to Beijing, with Takaichi seeking Starmer's understanding of Japan's stance amid worsening Japan-China relations.

In November, Takaichi and Starmer previously met during the G20 summit in South Africa. Despite the upcoming Lower House election campaign starting next Tuesday in Japan, Takaichi intends to continue engaging in summit diplomacy during this period.

ボルボＥＶにグーグルのジェミニＡＩと会話、運転を補助

Conversation with Google's Gemini AI in Volvo EV to assist driving

Tokyo Shimbun | Local Language | News | Jan. 23, 2026 | UndeterminedTech Development/Adoption

Volvo Cars announced the launch of its new electric vehicle, the EX60, on January 21, 2026. This model is the first Volvo to feature Google’s generative AI, Gemini, enabling drivers to perform functions through conversational interaction with the AI while driving. The vehicle is equipped with a high-performance computer and offers a driving range of up to 810 kilometers on a single charge.

The EX60 introduces an innovative seatbelt system that adjusts based on sensor data related to traffic conditions and the occupant’s status. It also supports rapid charging, providing up to 340 kilometers of driving range in just 10 minutes using a high-power charger. Deliveries of the EX60 in Japan are expected to begin within 2026, though pricing details have not yet been announced.

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