Most major Japanese companies yesterday offered the lowest hike in base pay in four years, a setback for Japanese Prime Minister Shinzo Abe’s campaign dubbed “Abenomics” to spur the long-sluggish economy.
Japan’s annual shunto spring wage increases are a barometer of corporate confidence, and an indicator of whether consumer spending can get a needed boost — which this year’s hikes are unlikely to supply.
“Wage growth is far from enough to accelerate economic growth and inflation,” Japan Research Institute chief economist Hisashi Yamada said.
Toyota Motor Corp’s base pay hike, traditionally a benchmark other companies use to gauge their increases, came to ¥1,300 (US$11.34) a month — below last year’s ¥1,500. The new hike is less than half the union’s demand and far below the ¥4,000 given in 2015.
For a Toyota mid-level technician earning ¥360,000 a month, the pay increase works out to 0.36 percent. It can buy one bowl of rice with pork cutlet and miso sauce.
Despite sitting on piles of cash, Japanese companies are reluctant to raise wages as they are anxious about the economic outlook, currency swings and the chance US President Donald Trump’s trade policies will hurt export sales.
Major electric machinery makers such as Mitsubishi Electric and Panasonic Corp, like Toyota, lowered their wage hikes for a second year. They are giving ¥1,000, down from ¥1,500 last year and ¥3,000 the previous year.
Yamada and other analysts said that major companies on average are increasing base pay about 0.3 percent for the fiscal year starting next month, the smallest amount in four years.
Total wage growth will be higher than the hikes now being announced: Workers will see about 2 percent more in their paychecks because their salary goes up automatically every year under Japan’s seniority-based employment system. Still, such an increase is below last year’s 2.14 percent, and 2015’s 2.38 percent, a 17-year high.
“I don’t actually feel the economy is recovering or Abenomics is really bringing benefits,” said a 33-year-old worker at a precision machinery maker in Nagano Prefecture, west of Tokyo.
The man, who requested anonymity, has housing loans to repay and two kids to raise.
From the early 2000s, base pay raises were virtually frozen for more than a decade until Abe swept to power in late 2012 with a pledge to reboot the moribund economy.
He urged companies to lift wages and they complied, to a degree. Abe’s government has intervened heavily in wage talks between management and labor unions who have lost bargaining power in the face of declining unionization.
In Japan, labor unions, which this year kept their demands unchanged from last year, tend to attach greater importance to job security and loyalties to their company instead of aggressively seeking higher wages.
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