Ja­pan’s job­less rate at 20-year low, con­sumer spend­ing drops

Kuwait Times - - BUSINESS -

Ja­pan’s job­less rate fell to a 20-year low in Oc­to­ber, but con­sumer spend­ing and in­comes also edged down as the tight la­bor mar­ket failed to spur sig­nif­i­cant in­creases in wages. The lat­est fig­ures are likely to help Prime Min­is­ter Shinzo Abe’s ef­fort to ca­jole com­pa­nies into offering higher wages, to ac­cel­er­ate in­fla­tion by rais­ing con­sumer de­mand through higher in­comes. So far, short-handed em­ploy­ers have re­sorted to use of over­time and hir­ing more tem­po­rary work­ers, seek­ing to avoid in­creases in base wages that would be dif­fi­cult to re­verse if the econ­omy takes a turn for the worse.

The gov­ern­ment re­ported Fri­day that un­em­ploy­ment in the world’s No 3 econ­omy dipped to 3.1 per­cent in Oc­to­ber, com­pared with 3.4 per­cent in Septem­ber. It was the low­est level since July 1995. Con­sumer spend­ing, mean­while, fell 2.4 per­cent from the same month a year ear­lier, and av­er­age in­comes fell 0.9 per­cent.

Ja­pan’s in­fla­tion rate also was lower in Oc­to­ber, with core in­fla­tion ex­clud­ing volatile food prices down 0.1 per­cent for the third month in a row. The suc­cess of the gov­ern­ment’s “Abe­nomics” poli­cies hinges on get­ting con­sumers and com­pa­nies spend to more. Abe has also launched so­cial wel­fare ini­tia­tives aimed at eas­ing the bur­den of child care and el­der care to help en­cour­age more women to work.

This week, Abe ap­pealed to busi­ness lead­ers to of­fer big­ger wage in­creases dur­ing next year’s spring “shunto,” or “la­bor of­fen­sive,” when unions and com­pa­nies hash out pay agree­ments for the year.

Abe has pledged to slash cor­po­rate taxes in ex­change for progress on wages. The gov­ern­ment also in­tends to raise the min­i­mum wage, which is now at a mod­est 798 yen ($6.50) an hour on av­er­age, by 3 per­cent a year, aim­ing to get it up to 1,000 yen ($8.15) an hour by 2020. Big com­pa­nies, reap­ing record prof­its thanks to strong ex­port earn­ings, can af­ford that. How­ever, most peo­ple paid the min­i­mum wage work for small and medium-size com­pa­nies that can­not af­ford to pay more, said econ­o­mist Masamichi Adachi of JPMor­gan. “Those small tiny firms, which are al­ways los­ing money and don’t pay taxes, are not making money at all. If they have to raise wages their losses will grow and they will find it hard to sur­vive,” he said. —AP

TOKYO: A shop­per walks past a cloth­ing shop dis­play at a shop­ping street of Ginza area in Tokyo. Ja­pan’s job­less rate fell to a 20-year low in Oc­to­ber, but con­sumer spend­ing and in­comes also edged lower as the tight la­bor mar­ket failed to spur sig­nif­i­cant in­creases in wages. —AP

TOKYO:

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