EIGHT years after Natsumi started work at a printing company in Tokyo, her monthly salary is only ¥15,000 ($138) more than it was when she started. That equates to a paltry rise of less than 1% a year. She hopes that this year’s wage negotiation—an annual rite between employers and unions known as the shunto, or spring offensive—will provide a bigger boost.

She may be in luck. Economists are predicting the highest rise since wages started to inch up during the shunto in 2014, reaching 2.1% last year. (This figure includes regular wages, which are made up of “base pay” and a seniority-based element that is raised automatically, but excludes bonuses and overtime.) Asahi Group plans to raise wages by 3.4% at its soft-drinks business. Ikinari! Steak, a restaurant chain, says it is increasing the base wage alone by 5% for all its 430 full-time employees. “The momentum is there this year,” says Takeshi Niinami, the boss of Suntory, another drinks firm, who also advises the government on economic policy.

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The relatively bullish outlook is based in part on a tentative recovery. The economy has expanded for seven quarters in a row. Prices of goods have edged up over the past year. Bosses are starting to believe that the country may be escaping deflation for good. It helps that firms have been raking it in, too. Big businesses sit on hoards of cash (see chart).

The second reason is structural. The population is falling and getting older, causing a dire shortage of labour. There are now 1.59 jobs for every jobseeker, the highest level since 1974. Restaurants and construction firms have to offer competitive conditions if they want to find staff. Shinzo Abe, the prime minister, has pledged to lower the tax burden on firms that oblige.

Nonetheless, banks are forecasting an average pay rise of only 2.3-2.5%. That will be a disappointment to Mr Abe, who sees lifting wages as the crux of his promise to restore the economy to health. He has called for a 3% increase this year—something Japanese workers have not received for more than 20 years.

Many of the reasons wages have stagnated still apply. Part-timers, who tend to be paid less, make up more than a third of the workforce. Rigid labour law means employees do better by sticking with their company rather than moving. This makes workers less demanding, and bosses less generous. Those who want to treat their staff give chunky bonuses rather than raising monthly pay, a move which is nigh on impossible to reverse.

The enthusiastic outlook appears largely confined to big businesses and the capital. Kazutaka Ishii, who heads a company of 200 employees in Osaka, Japan’s second city, says that for business-owners there things are “so-so”. Individuals are not feeling the economic uptick, either.

At any rate, increases in wages have not yet translated into increases in consumption and greater inflation. Some reckon that will change if wages rise faster and people gain confidence in the economy. But a survey by REITI, a think-tank, suggests the hurdle is even higher. Some 60% of people in their 20s and 30s say they are reluctant to spend because they are anxious about having enough money in their old age. Costly state pensions must be trimmed, says Hideshi Nitta of Keidanren, a powerful business lobby which backs Mr Abe’s 3% target, to reassure young people that the system will still be solvent when they retire.

The reformers’ wish-list does not end there. “Investing in education and training are just as important as wages,” Mr Niinami says. The government also hopes to cap overtime, which might spur both hiring and consumption. Higher pay, in other words, is no cure-all.

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