Bank of Japan Governor Haruhiko Kuroda is finally getting a pay raise — and so, too, are a growing number of workers throughout the industrial world.
Wages are beginning to climb in the US, Japan, the UK and Germany as tightening job markets force employers to pay workers more. That is good news for households already benefiting from a steep fall in oil prices.
The raises are not big — Kuroda, for example, is getting a 1.3 percent bump — and labor has a long way to go to get back to where it was before the US recession hit at the end of 2007. Yet the increases are a welcome sign for policymakers that the world economy is on the mend and primed for potentially faster growth.
“It’s a very desirable development,” said Peter Hooper, chief economist for Deutsche Bank Securities Inc in New York and a former US Federal Reserve official.
The bigger pay checks will help lift output as workers spend the extra money they are getting — and falling energy prices reinforce their purchasing power. Global GDP will rise 3.5 percent next year after expanding 3.2 percent this year, according to the median forecast of 38 economists surveyed by Bloomberg News from Dec. 5 to Wednesday last week.
“A pickup in pay should be supportive of a further acceleration in consumption,” Credit Suisse Group AG co-headof global economics and strategy Neville Hill said.
The stepped-up salaries eventually may lead to faster inflation as companies raise prices to make up for their increased labor costs.
That is something central bankers, including Kuroda, will embrace rather than dread, given their determination to avoid deflationary slumps in their economies.
US Federal Reserve Chair Janet Yellen and her colleagues will be taking a close look at what’s happening to wages and inflation when they meet today in Washington for their last two-day policymaking meeting of the year.
Up for consideration: whether to drop their stated intention to hold short-term interest rates near zero for a “considerable time” after they ended their asset-purchase program in October.
The last increase for the benchmark federal funds rate came in 2006.
In Japan, Kuroda and Prime Minister Shinzo Abe — who won a sweeping victory in elections on Sunday — have been urging companies for months to boost wages, arguing that such action is needed to break the country’s decades-long economic funk. Kuroda’s pay increase, to ￥34.7 million (US$294,000), was the first for a Bank of Japan governor in nine years.
There are signs that businesses are starting to follow the central bank’s example. Base salaries rose 0.4 percent in October from a year earlier, a fifth consecutive increase, based on data from the Japanese Ministry of Health, Labor and Welfare.
Large companies are set to boost winter bonuses by an average 5.8 percent this year, the most since 2008, after lifting summer payouts by 7.2 percent, according to preliminary results from a survey by the Keidanren business lobby group.
NO VIRUS BLUES: A SEMI Taiwan official said that the virus does not slow down the global semiconductor industry’s investment in manufacturing equipment The production value of the nation’s semiconductor industry is expected to grow 16.7 percent this year from last year, outpacing the global industry’s 3.3 percent growth, industry association SEMI said yesterday. That would help Taiwan safeguard its second spot in the global semiconductor market with a production value of more than NT$3 trillion (US$102.73 billion), SEMI Taiwan president Terry Tsao (曹世綸) told a media briefing in Taipei for the Semicon Taiwan trade show beginning today. The global semiconductor industry’s production value is expected to increase to US$426 billion this year, SEMI said. In terms of semiconductor equipment investment, equipment billings from Taiwanese firms
Intel Corp has received licenses from US authorities to continue supplying certain products to Huawei Technologies Co (華為), a company spokesman said yesterday. Washington has been pushing governments around to world to squeeze out Huawei, saying that the telecom giant would hand data to Beijing for espionage. From Monday last week, new curbs have barred US companies from supplying or servicing Huawei. This week, the state-backed China Securities Journal reported that Intel had received permission to supply Huawei. China’s Semiconductor Manufacturing International Corp (SMIC, 中芯國際), which uses US-origin equipment to make chips for Huawei and other companies, last week confirmed that it had sought
Swancor Renewable Energy Co (上緯新能源) yesterday announced plans for a 4.4 gigawatt (GW) offshore wind project off Miaoli County as part of its commitment toward Taiwan’s energy transformation, the company said in a statement. The “Formosa 4” project includes three deep-water wind farms 18km to 20km off the coast, Swancor Renewable CEO Lucas Lin (林雍堯) said, adding that planning for the project began last year. A proposal for Formosa 4 was this week submitted to the Environmental Protection Agency (EPA), the company said. Swancor Renewable jointly developed the Formosa 1 project, a 128 megawatt (MW) wind farm about 4km off Miaoli and the
INVEST IN TAIWAN: A metal components casting firm and the world’s largest maker of aluminum bicycle rims also obtained approvals to join the program Solar Applied Materials Technology Co (SOLAR, 光洋應用材料), a part of Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) “green supply chain,” has pledged to invest NT$1 billion (US$34.1 million) to build a new plant at the Tainan Technology Industrial Park (台南科技工業區), the Ministry of Economic Affairs said yesterday. SOLAR has been collaborating with TSMC to extract precious metals from waste and reuse them as “sputtering target” material in high-end semiconductor manufacturing, a TSMC press release issued in May said. Established in 1978, SOLAR also offers key materials and integrated services to customers in the optoelectronics, information and communications technology, petrochemicals and consumer electronics industries,