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UPDATE 4-Workers at Japan's top companies get meagre 2017 pay hikes in Abenomics setback
March 15, 2017 / 5:06 AM / 9 months ago

UPDATE 4-Workers at Japan's top companies get meagre 2017 pay hikes in Abenomics setback

    * Toyota, electric machinery makers offer smaller base pay
    * Unions made same demands as one year ago
    * Big firms offer far less than union demands
    * Hikes 'far from enough' to boost growth - economist

 (Adds govt spokesman's comment, detail)
    By Tetsushi Kajimoto
    TOKYO, March 15 (Reuters) - Most major Japanese companies on
Wednesday offered the lowest hike in base pay in four years, a
setback for 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," said Hisashi Yamada, chief economist at
Japan Research Institute. 
    Toyota Motor Corp's          base pay hike, traditionally a
benchmark other companies use to gauge their increases, came to 
1,300 yen ($11.34) a month - below last year's 1,500 yen. 
    The new hike is less than half the union's demand and far
below the 4,000 yen given in 2015. 
    For a Toyota mid-level technician earning 360,000 yen a
month, the pay increase works out to 0.36 percent. It can buy
one bowl of rice with pork cutlet with miso sauce on top, a
speciality of Nagoya, near the Toyota headquarters.
    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 U.S. 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 yen, down
from 1,500 yen in 2016 and 3,0000 yen the previous year.
    Yamada and other analysts say that major companies on
average are increasing base pay about 0.3 percent for the fiscal
year starting in April, the smallest amount in four years.
    Total wage growth will be higher than the hikes now being
announced: Workers will see roughly 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 over 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 labour unions who have lost bargaining
power in the face of declining unionisation.
    In Japan, labour unions, which this year kept their demands
unchanged from 2016, tend to attach greater importance to job
security and loyalties to their company instead of aggressively
seeking higher wages.
    "The government hopes that wage hikes are firmly realised
based on corporate profits and that the trend of wage hikes will
spread to small firms and non-regular workers," Chief Cabinet
Secretary Yoshihide Suga told reporters on Wednesday. 
    Abe wants healthy wage hikes to drive a virtuous growth
cycle in which consumer spending and business investment rise,
in turn lifting profits and wages. The central bank also wants
to see higher wages lift prices and enable Japan to break out of
its deflationary rut.
    But the latest meagre gains bode poorly for that scenario.
    In the face of rising costs of living and uncertainty about
the future, ordinary workers opt for saving rather than
    "It's hard to make ends meet and rising vegetable prices are
driving up the cost of living," said a 22-year-old female
factory worker at a watchmaker in central Japan.
    "I'll set any increased income aside for food expenses
rather than spending for recreation."
    ($1 = 114.6800 yen)

 (Reporting by Tetsushi Kajimoto; Writing by Malcolm Foster and
Tetsuhi Kajimoto; Editing by Richard Borsuk)

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