Nintendo announces plans to raise basic employee salaries by 10%

Japanese video game company Nintendo has announced plans to raise its minimum wage by 10%. Earlier, a stronger yen forced the company to cut its profit forecast for fiscal year 2023.

Nintendo announced the pay rise after Japanese Prime Minister Fumio Kishida called on local companies to pay staff more amid rising inflation.

The parent company of clothing chain Uniqlo, Fast Retailing, was one of the first firms to heed the prime minister's advice. Fast Retailing said in January that it would increase staff salaries by 40%.

For long-term economic growth, it is necessary to retain the workforce, stressed Nintendo president Shuntaro Furukawa. High wages will help companies attract talent, as falling birth rates and low immigration could lead to a serious labour shortage in Japan.

Nintendo slashed operating profit by 4% to $3.6 million against Refinitiv's expectations of $4.4 billion. The company revised its software sales forecast to 205 million units from 210 million, and cut its Switch console sales target to 18 million units from 19 million.

According to Furukawa, Nintendo has no plans to raise prices on software and game consoles, but will consider such a measure if circumstances warrant.

The stock market does not believe Nintendo will be able to ramp up Switch production, UBS Securities Japan analyst Kenji Fukuyama said. He added that investors don't have high hopes for 2023-2024. Fukuyama believes Nintendo will not release a new console until next year at the earliest.