Japanese Prime Minister Shinzo Abe’s goal of reflating the Japanese economy has been dealt a setback as pay rises remain off the table at two of the nation’s biggest banks for a second consecutive year.
Labor unions at Bank of Tokyo-Mitsubishi UFJ Ltd and Mizuho Financial Group Inc do not intend to ask for an increase in base wages for the financial year starting April, according to people with knowledge of the matter.
Mizuho’s union reached the decision after taking into account the pressure on banks’ profits from factors including negative interest rates, according to one of the people.
The so-called shunto, or annual wage negotiations between companies and their labor unions each spring, are watched closely because wage rises are seen as crucial for ending decades of falling prices that are hampering the economy’s revival. Japanese banks are finding it harder to earn money from lending after the central bank introduced negative rates last year — ironically to help end deflation.
Abe is counting on higher salaries to spur consumer spending, which would in turn boost prices and corporate profits that can be shared with workers. However, many Japanese companies remain reluctant to contribute to this so-called virtuous cycle even as jobs become more plentiful. The ratio of jobs to applicants is the highest in a quarter of a century.
The labor union at Sumitomo Mitsui Banking Corp, the other of Japan’s three megabanks, is to ask management for a 0.5 percent increase in base salary, according to a person familiar with the matter.
That is about ￥3,000 (US$26.4) per month for an ordinary full-time employee, the person said.
The bank’s union expects the request to be accepted by management, given Kunibe’s comments, the person said.
Sumitomo Mitsui and its rivals employ about 95,000 people at the banking units covered by the labor talks. The three lenders raised pay for the first time in 19 years in 2014, a year after the Bank of Japan began its campaign of flooding the economy with cash to achieve 2 percent inflation.
However, that goal remains distant, with core consumer prices sliding 0.2 percent in December last year.
While the lenders are on course to achieve their combined profit goal of ￥2.15 trillion in the fiscal year ending next month, the target is 5.2 percent lower than the previous fiscal year’s earnings.
Combined net interest income fell 9.9 percent in the nine months ended December last year as lending margins shrank.
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