Over half of Japan firms do not plan to raise base pay by 3% in 2018

More than half of Japan's companies do not plan to raise base pay in annual wage talks in coming months, a set back for the prime minister and the country's main business lobby which has called for wage rises of 3 per cent to fuel an economic revival.

In a monthly Reuters Corporate Survey, just less than half said they would raise pay and most in this group said the increase would be similar to last year's level of about 2 per cent.

Prime Minister Shinzo Abe and the Keidanren business group have sought a 3 per cent wage rise to encourage consumption and inflation, key elements of Abe's bid to vanquish the country of years of deflation.

A rise in fourth-quarter GDP reported last week marked Japan's longest continuous economic expansion since the 1980s but significant wage rises remain elusive even though the labour market is its tightest in about four decades.