The owner of the Japanese fashion chain, Uniqlo announced a 40% increase in wages for workers in the country.
Fast Retailing said the new salary policy applies to full-time employees at its company headquarters and stores in Japan from early March.
Last week, Japanese Prime Minister Fumio Kishida urged firms to raise wages to help people struggling with rising prices.
This follows an alarming rise in inflation in the country, yet wages in the country remain unchanged.
The move was made to reward employees appropriately for their ambition and talent, as well as increase the company's growth potential and competitiveness in line with global standards, according to Fast Retailing.
Meanwhile, PM Fumio Kishida warned that stagflation'* would emerge if wage growth lagged behind price increases.
*Stagflation is when the economy does not grow but prices continue to rise.
Japan's economy reportedly contracted in the third quarter by 1.2% year-on-year, while core consumer prices rose 3.7% in November, the fastest rate since 1981.
Meanwhile in Tokyo saw inflation jump to the highest level since 1982 in December with an increase of 4%.
