TOKYO- In response to Prime Minister Fumio Kishida's calls for higher wages to counter a surge in inflation, Japan's top companies on Wednesday offered their largest pay increases in a quarter-century.

Japanese wages have been a casualty of years of sputtering growth since the late 1990s, leaving worker pay nearly flat and well behind the OECD average. Kishida, however, is fervently advocating for higher pay at a time when inflation is at its highest level in four decades as a result of a weaker yen and rising commodity prices.

It remains to be seen if that will be sustained by businesses. According to a survey of 33 economists conducted by the Japan Economic Research Center, companies this year are anticipated to increase wages at "shunt" spring wage talks that end on Wednesday by 2.85%. (JERC).

This is the fastest increase since 1997, when Japan entered a period of deflation lasting 15 years, and is significantly higher than the 2.2% increase from the previous year.

A 5% pay raise has been demanded by the Rengo umbrella labor group. Base and bonus pay are discussed in the wage negotiations.

Hisashi Yamada, the senior economist at the Japan Research Institute, said that given that consumer inflation, at 4.1%, is outpacing wage increases, pay increases of 3% or more must continue in the upcoming years to sustain price stability at 2%, the central bank's target.

Industrial conglomerate Hitachi Ltd., a corporate Japan mainstay, announced a 3.9% increase in overall pay, up from a 2.6% increase the previous year.

However, it is unclear whether the wave of wage increases will spread to small businesses, which employ seven out of every ten people in the country but struggle to pass on costs to their larger clients at the end of supply chains.

Takahide Kiuchi, a former Bank of Japan board member and current executive economist at Nomura Research Institute, believes that base pay increases are crucial in determining how wages affect prices.

The JERC survey showed that, excluding seniority-based pay, base compensation that boosts fixed labor costs accounts for just 1.08%.

"We must concentrate on base pay." It will likely be a little above 1%, still way lower than the price increase, "said Kiuchi.

For the first time in eight years, Kishida's administration will probably hold a joint three-party meeting with labor and management on Wednesday to ensure structural pay increases.

Already, there are some encouraging signs.

Workers from Japan's largest trade unions reached early agreements for significant wage increases last week. Other unions, including those from Toyota, the world's largest automaker, and Honda, have also secured the largest pay raises in decades.

What makes Shun unique in Japan is that every March, more than 300 major firms with 1 billion yen or more in capital and 1,000 or more employees negotiate with their unions to follow wage pacesetters such as Toyota Motor Corp.

Unions have historically settled for relatively meager pay increases of around 2% in recent years, as unions prefer to cooperate with management in maintaining job security rather than aggressively demanding pay increases.

In addition, if inflation slows down, as it is predicted to do starting in the middle of the year, some analysts are sceptical that unions will be as aggressive in their demands for higher pay in the years to come.

Since May 2014, when the sales tax was increased from 5% to 8%, real wages fell in January at their fastest rate.

According to OECD data, Japan's wage growth over the past 30 years has been only about 5%, significantly less than the average 35% increase experienced by member countries over the same time period.