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Japanese firms' earnings momentum unlikely to bring hoped-for wage hikes

37 Comments
By Yuki Yamaguchi

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unlikely to bring hoped-for wage hikes

In Japan will be more work less money, sometime with unpaid overtime.

https://www.japantimes.co.jp/news/2020/08/21/national/social-issues/trainees-hiroshima-overwork-unpaid-overtime/

3 ( +14 / -11 )

More than a hint of déjà vu here.

2014. Abe urges business leaders to increase wages. https://japantoday.com/category/politics/abe-urges-business-leaders-to-increase-wages

2016. Abe calls for wage rises to boost Japanese economy. https://www.ft.com/content/2ed90f76-abfc-11e6-ba7d-76378e4fef24

2018. Abe asks business leaders to raise wages before sales tax hike. https://japantoday.com/category/business/Abe-asks-business-leaders-to-raise-wages-before-sales-tax-hike

How can a newspaper article expire? Isn't it supposed to become part of the documentation of history. Anyway, bonus points for preserving the comments.

17 ( +22 / -5 )

So soaring profits for exporters, about 40% or less of the economy. That employed 3% of the working population directly. Just can’t bring themselves to raise wages?

‘What hope does the 97% of domestic workers have? Soaring costs stagnating wages. That’s the old new elite making money off the backs of workers being driven to poverty watching food shows on flat screen TVs.

2 ( +9 / -7 )

Solid profits at major Japanese companies in recent earnings reports are unlikely to translate into near-term wage hikes in broad sectors due to the risk of a global recession, dashing Prime Minister Fumio Kishida's hopes for higher pay to blunt the impact of rising prices.

These headlines just deserve the "Curb Your Enthusiasm" theme playing continuously.

30 years of record high corporate profits and stock market and G-7 wage stagnation.

"There is just not enough momentum to enable wage increases" across the board, said Saisuke Sakai, senior economist at Mizuho Research & Technologies.

Seems to be a market in making weak excuses for the neo-feudal agenda and corporate greed.

2 ( +10 / -8 )

No wage hikes? Say goodbye to any population growth and look forward to population shrinking. Young people can't afford to get married, much less have children.

16 ( +19 / -3 )

I think the demographics in Japan set some basic limits on what we can expect from the enconomy. Need to get more young people, which means immigration reform. Also probably need to embrace tourism and English language, since almost everyone has a positive impression of Japan overseas (but many are nervous about the language).

5 ( +7 / -2 )

No wage hikes in the ‘good times’ because companies need to be cautious for possible future ‘bad times’.

No wage hikes in the ‘bad times’ because of the ‘bad times’.

13 ( +18 / -5 )

Just from the opening paragraph and the wording make me go crazy. Like company talk “ Unlikely “ otherwise is “will not”. Wage hikes. This give off a negative. Where as “wage rise” give of a positive. I think they called weasel words, I called them company wording for lies. Last year it was, we are still getting back to normal and wage rise will stop the recovery. More Company lies.

-1 ( +3 / -4 )

Minimum wage legislation is a big debate as critics warn of possible market distortions. Meanwhile the government has only been "asking" companies for a wage increase, to no avail.

For quick, significant improvements, the government should start by intervening into unlawful activities/economic crimes by employers such as unpaid overtime work or other contract breaches.

1 ( +3 / -2 )

Constant repeat of the same BS!

14 ( +16 / -2 )

Well that's that then.

4 ( +6 / -2 )

According to an SMBC Nikko Securities survey of 1,440 companies listed on the Tokyo Stock Exchange, their combined net profit in the April-June quarter rose 9.2 percent from a year ago to 12.03 trillion yen.

Welcome to neo-feudalism, Japanese style.

1 ( +9 / -8 )

""Solid profits at major Japanese companies in recent earnings reports are unlikely to translate into near-term wage hikes in broad sectors due to the risk of a global recession""

Sure they haven't done it in the past 10 or 15 years what makes the BOJ or Mr. Kishida think that they will this time around.

5 ( +7 / -2 )

So what was the point of the endless QE, negative interest rates by BOJ?

2 ( +5 / -3 )

well, the article is not completely true. I work for one of the companies mentioned here, and we have a portion of our bonus directly tied to the profit level of the company. Given these record profits, all of our bonuses will be going up quite a bit.

-4 ( +4 / -8 )

This is how NEW CAPITALISM by KISHIDA looks like.

This is the wealth distribution he promised, enjoy guys while you still can guys, from now on it will only get worse: tax hikes, further yen depreciation, more overtime, and higher prices.

2 ( +7 / -5 )

I'm still hopeful of salary rises because the economy has not fully opened, and not all industries are firing on all cylinders. Labor shortages in virtually all other OECD countries have given long overdue salary increases, and Japan shouldn't be an exception, unless it wants its working youth to leave the country again like in the 9ties, and get double the salary for working half the time. Surf's up is a pretty big draw card.

When manufacturing (from recent massive plant investments), tourism, and business travels wakes up, I would be very surprised if salary increases doesn't ensue.

-4 ( +0 / -4 )

"A weaker yen has a big positive impact on our sales," a Toyota official said.

Alas the value of those sales being in yen, means although they increased in nominal terms, they decreased in real terms.

combined net profit in the April-June quarter rose 9.2 percent from a year ago

And just this year the yen has declined about 20 yen in value versus the US dollar.

"To achieve the sustainable wage increases that the government wants, companies need to increase productivity" rather than relying on external positive factors such as a weaker yen, Sakai said. 

This is the important part.

Rather than try to centrally plan the economy, enact reforms that encourage higher productivity and let the economy - we the people - respond to those incentives.

(And stop blowing our money and scarce resources of this country on useless government initiatives.)

-2 ( +3 / -5 )

Wow, it's almost like the politicians haven't learned from the failure of Abenomics the first time! And here they are again, with Kishida having said flat out he wishes to continue it and "suggesting" companies increase wages. Big surprise. But not to worry, when only 20% of the population turns out to vote and most regions only have one or two representatives, the LDP will still win a majority of that 20%.

0 ( +6 / -6 )

Stagflation and lower real wages will be accepted by the masses in Japan as they are, and have been for a long time, unwilling to change the status quo which would require a change of government and real unions who strike. Neither are likely.

3 ( +5 / -2 )

Rather than try to centrally plan the economy, enact reforms that encourage higher productivity and let the economy - we the people - respond to those incentives.

Did you miss the part in the article where it states profits and productivity are way up yet wages will not rise?

As has been so for decades?

How much more "incentivization" does Japan Inc. and the corporatocracy need?

https://www.epi.org/productivity-pay-gap/

2 ( +6 / -4 )

Waiting for the "trickle-down" to start for now, what, 10 years?

The solid earnings come as Kishida continues to call on major companies to consider pay hikes. 

I miss the era of "urges"...

Before COVID. No can do, because you know: Lehman Shock (10 years after the fact did they still use that one!).

During COVID. No can do, because you know: COVID, Lehman Shock.

After COVID. No can do, because you know: Ukraine, COVID, Lehman Shock.

Beyond that. No can do, because you know: [insert news excuse: e.g. Taiwan], Ukraine, COVID, Lehman Shock.

Other variants:

No can do, because Yen is too strong.

No can do, because Yen is too weak.

No can do, because Yen is too average.

3 ( +8 / -5 )

Good. I am a major investor in Japanese companies as an American.

Then you should be knowledgeable to know that private demand contributes to most of Japan's GDP growth. Thus redistribution of income, ie, putting more money in workers' pockets, would ultimately generate more growth and thus gains than profit-hoarding and share buybacks, which look good in the short term but are toxic in the medium and long term to the economy.

-1 ( +2 / -3 )

Also probably need to embrace tourism and English language, since almost everyone has a positive impression of Japan overseas (but many are nervous about the language).

Regarding tourism my obervation is that the vast majority of Japanese do not want a lot of tourists in their country particularly Chinese ones. This idea of mass tourism was imposed by the government.

4 ( +5 / -1 )

BOJ is such a bs. They only care about big corporations and their profit.

2 ( +5 / -3 )

its called a greed.simply-greed.

capitalism as its best.

4 ( +7 / -3 )

blueToday  10:13 am JST

Waiting for the "trickle-down" to start for now, what, 10 years?

Nope the trickle down is now 40+ years with Reagan.

But isn't it ironic when the public have money, they spend it so maybe the pickle up works better than feeding the minions, peanuts all the time. If it works one way, it can certainly work the other way too.

0 ( +1 / -1 )

I’m waiting for the Japanese government to once again increase incentives for solar power but it’s a long wait-expect to pay more for electricity this winter folks!

-5 ( +1 / -6 )

Wow, shocking!

-3 ( +2 / -5 )

First, we have to know who the first recipients of those earning reports were. My splendid teacher at the business school taught me, that those reports are all created in different versions, colored and biased , according to the recipients or intentions. Companies present good numbers and future outlooks, for example when trying to impress politicians and public or to get a loan from banks or new big investments, but they create them more pessimistic and with negative future expectations when addressing shareholders who want to be cashed out, or employees and unions if they want wages rising etc. We just don’t have enough details and hard reliable numbers here to applaud for the big earnings or complain about not willing to raise employees’ wages.

0 ( +1 / -1 )

The solid earnings come as Kishida continues to call on major companies to consider pay hikes.

There's the problem. I've just solved the economic puzzle here for Japan. Nobel Prize? Bueller? Anybody?

-2 ( +0 / -2 )

Did you miss the part in the article where it states profits and productivity are way up yet wages will not rise?

The article didn’t state that productivity is up, at all.

The paragraph I explicitly quoted was the last one which mentioned the word, and you can go and read it now.

would ultimately generate more growth and thus gains than profit-hoarding and share buybacks, which look good in the short term but are toxic in the medium and long term to the economy.

You are blaming the wrong thing. To the extent that profits are “hoarded”, that indicates that there is nothing better to do with the money in Japan. Actual solution - make it more attractive to do stuff with those profits in Japan.

Share buybacks? So the investors have some more paper profits to work with… Ditto as above.

Japan’s economy is stale and boring, if we want to get it cooking again the answer is not to confiscate the money, which would only make the environment even less attractive.

0 ( +1 / -1 )

Japanese politicians and all their family members should have to work for minimum wage for 6 months and see how they survive on that. 1,000 yen an hour or less is why there are so many homeless people, population decline and no one spending money because they don't have it to spend.

3 ( +4 / -1 )

When do businesses ever pay more to staff if they are not forced to???

4 ( +4 / -0 )

The Japanese government is full of chancers that get away with fraud on the Japanese public.

I have met Japanese that have been imprisoned for not understanding the complex tax system but I have yet to see a politician in jail for bribery or corruption

1 ( +3 / -2 )

Solid profits at major Japanese companies in recent earnings reports are unlikely to translate into near-term wage hikes in broad sectors due to the the ruling class not wanting to share the wealth with those who actually create the wealth.

Fixed it.

1 ( +1 / -0 )

quote: almost everyone has a positive impression of Japan overseas.

almost everyone had a positive impression of Japan overseas. Until we were all banned.

0 ( +0 / -0 )

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