"Considering the tightness happening in the labor market, I think there will be a gradual increase of wages as demanded by market pressures," he said in an exclusive joint interview with CNBC and Broadcast Satellite Japan on Monday.
Recent official data showed the job offers to applicant ratio rose to 1.45 in March — the highest level since November 1990.
"I believe we are finally close to realizing the situation that if you want to recruit good human resources, you really have to improve the wage conditions or fail to hire anyone suitable," Abe noted.
His administration has long hoped higher corproate earnings would translate into improved salaries and cue customers to spend more — boosting domestic demand is a key goal of Abe's economic policy, also known as Abenomics — but that's yet to happen, according to recent data.
The latest labor ministry report showed inflation-adjusted real wages declining 0.8 percent on-year in March — the fastest pace of decline in nearly two years. Meanwhile, March regular pay inched down 0.1 percent, falling for the first time since May last year.
"For the last four years consecutively, we were able to increase the wage levels...basically, the momentum for wage increase is being sustained," Abe said on Monday.