business

Japanese companies running out of excuses not to raise wages

13 Comments
By Stanley White

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13 Comments
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Any rise eats into profits.

Call all you want but what company deliberately eats into its profits?

doesnt matter if it’s the right thing to do or not.

1 ( +5 / -4 )

It only 'eats into profits' in the short term.

Paying workers more also ensures that a company will have a greater chance of attracting the best talent, a long term investment that means long term stability.

Another potential (although not in Japan with their lifetime employment system, etc) is that paying workers more creates a more motivated, harder working worker who will do more than just skate by doing the bare minimum. It also creates greater worker loyalty and fosters a sense from the workers that the company actually gives a daikon about them, so they'll give one about the company.

Paying workers more is an investment in the long term success of the company.

5 ( +7 / -2 )

The labor market is disfunctional due to legal protections for permanent employees destroying job liquidity because if you change jobs the perks such as high number of holidays will restart at new company at lowest level. Second factor is labor law allowing employers to use contract workers like slaves doing same work with no legal protection.

I have tried multiple times to switch from my current company, but potential JP employers absolutely will not bend on pay, holidays and other perks.

7 ( +7 / -0 )

Actually, I think there are plenty more excuses....

-2 ( +1 / -3 )

“An increase in disposable income helps improve the economy.”

"I approve of raising disposable incomes, because in the end this will improve the economy by raising consumption."

Two different guys saying the same thing.

If socialist Japan wants to give this a try, go for it. I don’t think it will work and we’ll be back to waiting for structural reforms, but then Japan is not like a normal free market economy driven by price signals. Then broken model may be broken but there might still be some small gains to be had...

0 ( +1 / -1 )

Any rise eats into profits.

Not in the long term. Those workers are consumers. Consumers with more money in their pockets will spend more on the companies' products and services, with the result that profits will rise in a sustained way.

3 ( +4 / -1 )

Haven't had a raise -- in fact, only one 10% cut -- in 18 years at the same company [albeit as a "long-term part-timer" to use their official label]. I don't expect this to change just because Abe wants it. Sigh...

2 ( +2 / -0 )

Pointless demand. The government itself it the reason wages can't go up. Companies are required to keep more employees than they need, and it is almost impossible to fire a poor employee. It's a semi-socialized system, and while such a system makes everything more equal, it also brings down the overall wealth.

When the government decides to allow business to operate freely in this country, wages will go up because companies will compete for the best workers. That will bring another set of problems that Japan is ill-equipped to handle, but I don't see any other way forward.

2 ( +2 / -0 )

Spot on commanteer.

Consumers with more money in their pockets will spend more on the companies' products and services, with the result that profits will rise in a sustained way.

This is the theory of Abenomics. (It may be true for a limited number of consumers but not this personal one - I buy or pay more only when I need to get what I want - I do not pay more for the sake of supporting some wacky pseudo-economic policy)

The problem with Abenomics is that the labour market is inflexible, two-tiered, and not responsive to normal economic price signals, and Abe has no intent to overhaul the labour regulations to level the playing field for workers and the businesses who hire them.

Abenomics can never produce a /sustainable/ virtuous cycle of rising profits and wages across the entire country by annually urging his friends in the business lobby to hike wages by x percent.

The best that Abenomics will produce is an increase in inequality in the short term, and an economy susceptible to another nasty downturn when the business cycle turns.

Unless of course Japan’s socialist model of running the economy is going to break the mold and succeed in the 21st century. I expect others to streak ahead.

0 ( +0 / -0 )

 The government itself it the reason wages can't go up.

Yeah right. Ever read a modern IR report from a Japanese corporation? They all pledge to "maximize shareholder returns." In other words, it's a promise to allocate a greater portion of revenues to profits and less to labor.

If you want to blame the government, you must also acknowldge the govt is the reason why corporate profts are near an all-time high. The companies are refusing to uphold their part of the bargain in this social compact.

0 ( +1 / -1 )

In other words, it's a promise to allocate a greater portion of revenues to profits and less to labor.

BS.

If there is so little demand for / much supply of something that there is no need to pay more to obtain and keep it, there is no sane reason to pay more for it anyway.

If companies need to pay more to retain labour, they are still maximizing shareholder returns - because the alternative would be losing labour and thus producing less.

0 ( +0 / -0 )

"If there is so little demand for / much supply of something that there is no need to pay more to obtain and keep it,....

There's a ton of demand for Japan's booming convience store services. The operators deal with it by immigrant labor which they can pay less for. Your little theory has zero relevance in the real world.

0 ( +1 / -1 )

That there is an abundance of what you call immigrant labor that accepts low pay fits perfectly with my point, whereas you are reduced to arguing that combi chain operators ought pay those staff more, at the cost of either the customers or the shareholders - when the immigrant labor is happily doing the work anyway.

0 ( +0 / -0 )

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