Japan’s major companies are giving lower wage increases next fiscal year as Prime Minister Shinzo Abe’s efforts to boost the economy falter.
Toyota Motor Corp agreed to increase monthly base salaries ￥1,500 (US$13) in the year beginning next month, a statement from the company said yesterday. That compares with a ￥4,000 increase this fiscal year.
Panasonic Corp and Hitachi Ltd have also both agreed to a ￥1,500 wage increase next fiscal year, separate statements from the companies said yesterday.
That is half their hike for this business year. Japanese companies are struggling with slowing profit growth, a weakening international outlook and a strengthening yen, which threatens to cut profits earned overseas.
“The biggest reason companies are offering smaller pay increases is because profits are not rising as much as last year,” Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute in Tokyo, said by telephone yesterday.
“There are also concerns about the outlook for the economy, especially with uncertainty over China’s growth. On top of that we’re seeing hardly any inflation,” Shinke said.
Toyota’s resistance is the latest indication that the virtuous cycle sought under Abenomics — in which wage growth, higher consumption and price hikes combine to drive sustainable economic growth — might be stalling.
Japan’s largest automaker predicts net income would increase 4.4 percent in the year ended this month, compared with 13.2 percent last fiscal year.
“The tide has turned,” Toyota president Akio Toyoda said after negotiations, managing officer Tatsuro Ueda told reporters yesterday.
“It started with production rate increases and competitiveness and is expanding to changes in the exchange rate and stronger than expected environmental regulation in emerging countries,” Toyoda said.
Nissan Motor Co, Japan’s second-largest automaker, reduced its wage hike to ￥3,000 for next fiscal year, the company said yesterday, compared with ￥5,000 this year. Honda Motor Co agreed with its union on ￥1,100 raises, compared with ￥3,400 for this fiscal year, according to a faxed statement from Japan’s third-largest automaker.
Kirin Holdings Co, Japan’s second-largest brewer by market value, is one of the few companies bucking the trend, with its first wage increase in 15 years.
The beermaker agreed to increase wages by ￥2,000, the first base pay increase since 2001, as the company achieved its goal of halting shrinking market share and booked higher profit than expected, Kirin Holdings spokesman Daigo Yamazaki said yesterday.
Japan’s steelmakers, which negotiate wage increases once every two years, are also increasing base salaries for next fiscal year.
Nippon Steel & Sumitomo Metal Corp, the nation’s largest, is to increase wages ￥1,500 a month next fiscal year, compared with ￥1,000 this business year, the same as JFE Holdings Inc, the second-largest, the companies said separately.
However, Toshiba Corp, grappling with an accounting scandal, is to keep base salaries flat, as is Sharp Corp, which has agreed to a takeover by Foxconn Technology Group (富士康), the companies said in separate statements.
Japan’s unions pared back wage demands early this year as the yen strengthened.
Workers in Japan eked out a 0.1 percent raise last year, while incomes dropped by 0.9 percent after adjusting for inflation. Real earnings have declined for the past four years, holding back consumer spending.
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