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Nintendo responds to falling profits with 10% raise for Japanese staff

Move contrasts with widespread layoffs in Western tech companies

Bright colorful illustration of Nintendo logo Illustration: Inkee Wang for Polygon
Oli Welsh is senior editor, U.K., providing news, analysis, and criticism of film, TV, and games. He has been covering the business & culture of video games for two decades.

As tech companies respond to a tough economic environment by laying off huge numbers of staff (including Microsoft, with a significant impact on its gaming division), Nintendo is heading the other way. Despite lowering its profit and sales forecasts in its most recent round of financial results, Nintendo is promising a 10% salary increase to all its staff in Japan.

According to Reuters, Nintendo president Shuntaro Furukawa told an earnings call on Tuesday that “it’s important for our long-term growth to secure our workforce.”

In the context of the actions of Western tech CEOs in recent months, this seems like a surprising move. Sales of Switch hardware and games continue to be strong as the console nears its sixth birthday — it is now officially the third-best-selling game console of all time — but Nintendo’s net sales and profits are down, while hardware sales are declining quite sharply for the second year in a row. Nintendo blamed supply issues and exchange rates for its disappointing performance, and its stock price fell by 7.5% on the Tokyo Stock Exchange, its biggest drop in over a year.

These are not the conditions under which a company would normally give all its staff a double-digit raise. But Nintendo is different — and so is the Japanese labor market. Reuters points out that the Japanese government is putting pressure on employers to increase wages to combat inflation, while companies also need to offer competitive pay in the face of labor shortages caused by a falling birth rate and low immigration.

The move is also part of a strong Nintendo tradition of looking after its workforce. As many pointed out in the wake of the wave of “efficient” tech layoffs in January, beloved former Nintendo president Satoru Iwata once said: “If we reduce the number of employees for better short-term financial results, employee morale will decrease. I sincerely doubt employees who fear that they may be laid off will be able to develop software titles that could impress people around the world.”

It’s good to see Furukawa following his predecessor’s advice.