Japan firms heed PM’s call to boost salaries
TOKYO: Major firms yesterday announced pay rises for workers after sustained pressure from the government in its attempt to push up prices in long-deflationary Japan. Prime Minister Shinzo Abe’s drive to get Japan economically ship-shape with a mix of easy money and fiscal largesse has born some fruit since its launch two years ago, in the form of soaring stock prices and a falling currency. But stagnant salaries have been one of the main missing links in the “virtuous circle” of growth that the premier’s signature “Abenomics” plan envisages.
With deals from some of Japan’s biggest employers announced yesterday following the annual labor talks-known as “shunto”, or the “spring offensive”it appeared the prime minister was at least partially getting his way. The world’s biggest automaker Toyota said it would raise employees’ pay by an average of 4,000 yen ($33) a monthabout 1.14 percent above current pay. Toyota employees would also get an average bonus worth 6.8 months of their base wage-a common pay structure in Japan. The firm now expects to book a record 2.13 trillion yen ($18.1 billion) net profit in the fiscal year to March.
Last year the Corolla and Prius hybrid maker gave the first wage rise in six years. Japan’s secondlargest automaker Nissan agreed to give an even bigger raise of 5,000 yen a month, and a bonus worth 5.7 months of employees’ base wage, the company said. “We’ve had thorough discussions on the very difficult challenge of becoming more competitive... while contributing to sustaining a good economic cycle,” Toyota managing officer Tatsuro Ueda told reporters. Major electronics firms, such as Panasonic and Toshiba, agreed to give a unified wage rise of 3,000 yen a month, bigger than last year’s 2,000 yen.
‘Promising’
Pay rises have taken on an extra significance since a sales tax increase in April last year dented the economy’s frail recovery. The rise-Japan’s first in 17 years-slammed the brakes on consumer spending, plunging the economy into recession and throwing Abe’s growth-boosting program into question. The plunge in the value of the yen, while helping exporters, reduced spending power at home because it made imports more expensive. Official data have shown that Japanese household spending in 2014 declined at its fastest pace in eight years, underscoring how badly clobbered the average person felt.
Observers said the wage settlements looked “promising” but the question now would be whether the thousands of smaller companies that make up a huge chunk of Japan’s economy would follow suit. “It is important to note that the ‘first movers’ which have announced wage hikes so far do not represent the typical firm,” said Marcel Thieliant, an economist on Japan at Singapore-based Capital Economics. “The median base pay hike last year fell well short of the hikes at the ‘first movers’, and we think that this will remain the case this year.”
Under Abe’s economic drive, the Bank of Japan has set an inflation target of 2.0 percent by next year. But a growing number of economists have cast doubt on the chances of the BoJ reaching its target without further expanding an already enormous monetary easing scheme, launched two years ago. “Overall, this year’s shunto shows that the tight labor market has indeed resulted in a stronger rise in base pay than last year,” Thieliant said. “But wage growth will likely still fall short of the levels required to lift inflation towards the Bank of Japan’s 2.0 percent inflation target.”—AFP