business

BOJ Gov Kuroda urges firms to raise wages, spending

35 Comments
By ELAINE KURTENBACH

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35 Comments
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Kuroda to the people of Japan: "The beatings will continue until morale improves."

2 ( +3 / -1 )

Selfishness to its full extent since there is no reason for companies to raise wages : no strike, no law, sheepish workers...

3 ( +4 / -1 )

Urging firms to raise wages? Just how in the heck are so many of the businesses here that rely on imports (higher costs with the devalued yen) to conduct their businesses to do what he is "urging"?

Doesn't he realize (dumb question because obviously he doesn't) that it's his government's policies that are preventing his "urges" from becoming reality?

I now have the "urge" to go outside and scream at the moon at this government's foolishness.

4 ( +5 / -1 )

So the vaunted Abenomics third arrow boils down to "pretty please, do what we want?"

Pathetic.

2 ( +3 / -1 )

Sounds like a campaign strategy to me, as it was Abe chan in Hakuba this Sunday.

I think that more than half of the factories in Nagano produces to export, yet the salaries being offered are no no more than ¥180000 for 220 hours of work. So what? Will you ASK them too? Who the hell raises payment because "Kuroda san is urging"?

0 ( +1 / -1 )

“As a corporate strategy, using their profits in a more productive manner is imperative,” he said. “Among others, investment in facilities and human resources, as well as reestablishment of supply chains including subcontractors are possible options.”

This coming from the government that got everyone into this current mess?

1 ( +1 / -0 )

"Kuroda said, exhorting corporate leaders to share the benefits they have reaped from the yen’s depreciation through the whole economy."

Spoken like a true government bureaucrat. Any businessman can tell you that you don't raise wages just because of some profits from Bank of Japan financial manipulation of the yen. You raise wages to reward your employees for the hard work and making right decisions that raised your company's profits. The reason that companies are not passing on the profits is because the profits are not due to hard work and they fear it wouldn't last anyway. The whole of Japan's bureaucracy works in this manner for example the economic zones, the tax incentives, etc. is all for show.

6 ( +6 / -0 )

Just as before , the only firms that might respond are in the top 20 , mainly the big exporters plus a few others , bulk of the domestic market oriented and medium to small companies that have seen their costs rise will hold off any pay rises as long as possible despite Kuroda and Abe,s urging. Wanna really increase wages ? Legislate a rise in the minimum wage or give a income tax cut to lower & middle class but of course LDP is not gonna do that.

1 ( +2 / -1 )

Most of the businesses are in a global race to the bottom for number of employees and wages. The competitive drive to reduce labour costs to realize profit and the negative impact of this on consumption and tax revenues is one of the central contradictions of capitalism--a contradiction that in Japan and elsewhere will not be resolved with lame appeals to businesses but rather from global labour movements. If anything, Kuroda should take measures to help these thrive.

3 ( +5 / -2 )

Kuroda suggested Japanese corporations might even restore some of the domestic production that has languished in the past two decades as manufacturers have shifted factories overseas to cut costs and be closer to fast-growing markets in developing countries.

And if pigs have wings they could fly. Doesn't Kuroda realize that Japan is one of the highest-cost production locations in the world? And that the population is aging and shrinking? This kind of "thinking" is really scary. The slide of Japan-Inc. will simply continue.

-1 ( +3 / -4 )

So, he is 'encouraging' companies to increase wages and 'appealing' to people to spend more. He is also 'encouraging' companies to bring their manufacturing back to Japan? And, he expects to achieve 2% inflation after raising sales tax by 3% in a flat economy where wages have not increased and in some cases decreased? Thank you Mr. Kuroda for this morning's satire comedy.

2 ( +4 / -2 )

Create trickle-down economics, then beg the companies to trickle down. Great economics at work here.

3 ( +3 / -0 )

They won't raise wages, companies worldwide have become conditioned to cutting salaries, benefits, and fulltime jobs. Spending? Not on anything meaningful for the average worker. Money spent will more likely go towards mergers, stock buybacks, and bonuses for the top executives. I worked on Wall Street for many years and have watched how this trend started maybe 10-20 years ago and then just exploded after the 2007 economic crisis. Will this trend change? Many analysts predict it will. I hope so, but I'm not so sure.

5 ( +5 / -0 )

Don't understand why businesses wouldn't want to raise wages. Government is forcing people to put money into stocks and if people also start purchasing products, wouldn't that be a win-win situation for companies? Government can only do so much. Corporations have to do their part. The alternative would be a slow, painful death of Japanese economy.

0 ( +0 / -0 )

The delay in the tax hike is widely seen in Japan as backtracking on Abe’s pledges to do more to reduce the government debt, which is more than twice the size of the economy.

It's also widely seen as a smart move to allow the economy to fully recover before needlessly forcing higher costs on consumers and businesses.

People who think the hike in the consumption tax is the only way to rein in debt forget that spending cuts work much faster at reducing debt than asking people to cough up even more of their heavily taxed earnings and profits. The saving generated could be redirected toward paying down the debt.

Spending cuts have been largely overlooked, and so, the revenue from the tax hike will not make much of a difference if the government continues its deficit spending.

“As a corporate strategy, using their profits in a more productive manner is imperative,” he said. “Among others, investment in facilities and human resources, as well as reestablishment of supply chains including subcontractors are possible options.”

Kuroda is asking firms to spend money so as to make his policies work. Devaluing the yen means more of it must be spent on things like energy, fruit, and other imported goods. The tax hike further reduces buying power, and raises costs. There's no incentive for corporations to spend money the way Kuroda would like them to.

Moreover, moving capital and production overseas becomes even more attractive than ever. Kuroda should call on government to stop digging into people's pockets, and business profits. He should be calling for a freer, more dynamic economy, and more trade.

Admonishing companies for taking being prudent is just scapegoating. It's down to the government to get out of business' and consumers' way.

3 ( +4 / -1 )

This is simple ... Increase prices as taxes are increases and then pass that on to consumers .... Most consumers will then buy less and make do with what they already have. This causing the economy to shrink MORE!!! My god is this place ran only by idiots ?

Sure raise wages... Make up for it by selling products at higher prices... Later selling less than they are now! Oh, sorry Joe worker we have to lay off workers profits are down. We need to cut cost ....

Stupidity at its finest!!!!

1 ( +2 / -1 )

Increasing the sales tax was a smart move, NOT

0 ( +1 / -1 )

Raise wages!? What blaspheme!! CEOs get humongous bonuses from cutting costs (a.k.a wages) because that makes the most and easiest profit for the company (a.k.a shareholders). Now, you want to cut potential profit by rising wages !? No way! CEOs answer to shareholders' interests first, workers are not even last in the list, especially Japanese workers who are slaves and are happy at it, they'll ganbaru as expected of them.

3 ( +5 / -2 )

I can assure you the only wage increases will be going directly to the CEO.

4 ( +4 / -0 )

Abenomics or like one commenter referred to it "Absession" (as in recession), sucks! I hope the LDP suffers a BIG loss in the upcoming elections. Get tat party out of office (I know I'm dreaming)! Real income has decreased since his policies took effect. OK so we're going to raise the comsumption tax by 3% to 8%. All right, but has anyone else noticed that most companies took that opportunity to increase their prices by 5-10%? Also, I don't know about you, but I sure haven't gotten a raise! Maybe if I do like Kuroda did and just ask my company to play along I'll get a raise. NOT!!!

2 ( +2 / -0 )

Does Kuroda think these companies are stupid? Doesn't he realize that if these companies thought they could earn a profit on increasing their spending and operations in Japan, that they would do it in a heartbeat?

Take a step back and consider a couple things. First, Japan's population continues to fall, and there will be one-third fewer Japanese by the middle of the century. That means there will be one-third fewer Japanese consumers to buy goods and services. What company in their right mind would invest in such an economy? With a guaranteed 1/3 reduction in customers, who would be hiring more staff, raising salaries, or increasing production?

The government itself has tried investing vast sums of money into the economy over the past few years, and what success have they to show for it? None at all. What make them think that companies doing the same thing would have a different result?

Last year, 70% of Japanese companies reported a loss for the year. So 70% of Japanese companies do not have the money to reinvest into the economy in the form of higher wages, or expansion.

The problem in Japan is not that wages are too low, but that the cost of living remains too high. The causes of Japan's high cost of living are the high tariffs charged on food and other goods, non-tariff barriers that drive up the cost of machinery and cars, non-competitive practices like corporate collusion and price fixing, and a heavy tax burden.

This high cost of living has resulted in deflation, as the economy naturally adjusts, and tries to find a balance. Left alone, prices would fall, companies would be forced to reduce expenses, and deflation would find a floor, then growth would start again. But the current policies of devaluing the currency to cause inflation do nothing at all to increase growth, hence the decline in GDP for this quarter.

There are Japanese companies which are earning profits, but these are on overseas operations. Their profits will be invested in overseas operations, not in Japan. If Kuroda, Abe, Aso, and Amari want these companies to put their profits into Japan, they had better come up with a better reason than simply telling them they "should do it". Unlike the government, companies are answerable for how they invest their money. They have to answer to their customers, shareholders, and employees, not to mention government regulators. If their investments cannot benefit these groups of people, then the investments simply cannot be made.

2 ( +7 / -5 )

Make up for it by selling products at higher prices...

What is actually happening is products are being sold at the same price with less volume, lower cost, gullible consumer.

2 ( +2 / -0 )

The corporations and banks have benefited from years of zero int rates and loose money policy, thanks to the BoJ. Their capital costs have never been cheaper.

So it's about time the greedy corporate world started to return the favor, by releasing some of 3 trillion dollars of cash they're siting on and pay raises or invest in the domestic economy, so that the govt does have to do the job for them.

1 ( +3 / -2 )

Last year, 70% of Japanese companies reported a loss for the year. So 70% of Japanese companies do not have the money to reinvest into the economy in the form of higher wages, or expansion

If you really run a company as you claim, you would know that being in the red does not necessary mean you don't have money or are in a dire situation. Take for example this stat : among the companies that went out of business in 2013, only 54% were in the red. http://www.tsr-net.co.jp/news/analysis/20140617_01.html

4 ( +4 / -0 )

BOJ Gov Kuroda urges firms to raise wages, spending

I hope he is referring to big corporates who are enjoying this cash out. Small and medium sized businesses are having -ve effect by BOJ's goal. Since they have less import power plus their customers are spending lesser.

0 ( +0 / -0 )

BOJ Gov Kuroda urges firms to raise wages, spending

http://www.whitehouse.gov/raise-the-wage

In Economic Theory, the wage increase is seen as giving you a bigger pizza slice. It is based on Demand Economic Principals. More money in the Individual Sector will stimulate the Private Sector. .

-1 ( +0 / -1 )

Kuroda may as well whistle in the wind

0 ( +1 / -1 )

globalwatcher:

" In Economic Theory, the wage increase is seen as giving you a bigger pizza slice. It is based on Demand Economic Principals. More money in the Individual Sector will stimulate the Private Sector. . "

That would be the economic Vodooh theory? Look, if governments could simply create economic growth by mandating spending, they´d all do that. Nothing easier than that!

-2 ( +0 / -2 )

Sigh, so many comments here are just people crying and not understanding anything. The govt can't force companies to raise wages. Yes, they should, as they benefited from Abenomics, and are not doing their part. But as a country that isn't communist, they can't force raises.

The US is having the same issue. With QE, the stock market is up big time, and corp profits are up. With loans being super cheap, buybacks and dividends are way way up. Yet wages are not up at all. This is a secular problem in the first world. Seriously, this is not just unique to Japan, so please stop with your ignorant statements here.

0 ( +1 / -1 )

The Japanese company I work for is steadfastly refusing to cooperate in the raising wages department.

2 ( +2 / -0 )

raise wages LOL itll never happen until the J Gov brings in laws that raise the minimum wage and make companies pay there workers more. but on the negative side companies will just say Japan is too expensive and move more production offshore. big corps have got the J Gov by the nads on this one im sorry.

0 ( +1 / -1 )

Only a peek at Japans current account surplus in September, three consecutive months of surplus, is evidence of the advantages a weaker yen can lift the value of overseas investment income. But the human cost is swinging wage deflation. Abe san never made any meaningful attempt to reform or restructure employment disparity.

1 ( +1 / -0 )

"Look, if governments could simply create economic growth by mandating spending, they´d all do that."

They ARE all doing that. When a few tried a bit of austerity a few years, ago, their economies started to tank. Europe has just announced a massive spending package.

"Spend while growth is low, save when growth is high."

-1 ( +0 / -1 )

Japan is in an extremely difficult trap. To reform, Japan has to be much less Japan-ness, which might not make sense too most Japanese, considering their quality social behaviour. Aging and declining population ensures a weakening economy and lower standard of living into the future. The mounting government debts at 245% of GDP is bankrupting the nation and citizens. Big government is getting even bigger, not smaller. BOJ is playing an extremely desperate bet in monetizing the debts. Downside risk to the people is increasing. Smart entrepreneurs will be moving out not increasing their bets in Japan strategically.......look at Son san of Softbank.

-1 ( +1 / -2 )

If you really run a company as you claim, you would know that being in the red does not necessary mean you don't have money or are in a dire situation. Take for example this stat : among the companies that went out of business in 2013, only 54% were in the red. http://www.tsr-net.co.jp/news/analysis/20140617_01.html

Being in the red does limit your ability to give pay raises, not increase them. A business that can't meet its debt obligations folds. Unlike the government, a business has to make a profit by sell goods or services.

The consumption tax increase isn't good for businesses or consumers. It artificially increases prices for companies, and their customers/clients.

Japan is in an extremely difficult trap. To reform, Japan has to be much less Japan-ness, which might not make sense too most Japanese, considering their quality social behaviour. Aging and declining population ensures a weakening economy and lower standard of living into the future. The mounting government debts at 245% of GDP is bankrupting the nation and citizens. Big government is getting even bigger, not smaller. BOJ is playing an extremely desperate bet in monetizing the debts. Downside risk to the people is increasing. Smart entrepreneurs will be moving out not increasing their bets in Japan strategically.......look at Son san of Softbank.

Absolutely correct.

Japan's situation calls for more unconventional solutions, not that old, government stand-by of "oh, let's just raise taxes!" The size, and interventionist nature, of Japan's government makes reform difficult. The members of the DIet think they should drive the economy.

If the government continues on its present course of tax and spend policies, then smart entrepreneurs and investors will move their cash out.

A more business and consumer friendly approach is needed. Tax cuts, free trade, foreign investment, liberalization of the Japanese economy, are needed. The government is far to big, and has tax policies that do not help consumers or the economy..

-1 ( +0 / -1 )

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