Japan’s job market is the tightest it’s been in more than 40 years, giving leverage to labor unions pressing for bigger pay hikes at annual wage negotiations and raising prospects for higher consumer spending and inflation.

The jobs-to-applicants ratio rose to 1.59 in December from 1.56, the highest since January 1974, labor ministry data showed. That means there were nearly 1.6 jobs for every applicant.

Still, many firms remain very reluctant to commit to a hike in fixed costs like wages. A Reuters survey last month showed that two-thirds of Japanese companies think the government’s push to raise wages by 3 percent is a tall order.