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Jobs, household spending hint at pick-up in domestic demand

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By Stanley White

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a robust labor market is lending support to domestic demand.

That's the key here. improve the labor market and you improve domestic demand which improves the economy.

Other data has shown consistent declines in consumer prices, another warning sign that domestic demand lacks momentum.

Because people don't have money. Raise the minimum wage, change the laws so that temps and contract workers can DEMAND a full time postion after one year, curb the service overtime, and you will see HUGE growth in the economy.

You want people to spend to stimulate the economy right? Well, they need money to do it.

Household spending has been falling since March as lacklustre gains in real wages and worries about how the Bank of Japan’s negative interest rate policy would affect the pension system turned some consumers even more cautious

the key here is lacklustre gains in real wages. That's where the gov needs to focus on. Lets see Shinzo's Arrows on this one.

I for one am not holding my breath....

5 ( +7 / -2 )

Buy what you need folks, not what the govt. tells you.

I want to know why Abe is worth ten million. How did he get so much, and how does he spend his money. If you want to be a leader, show us what you spend on.

2 ( +4 / -2 )

Raise the minimum wage, change the laws so that temps and contract workers can DEMAND a full time postion after one year, curb the service overtime, and you will see HUGE growth in the economy.

Don't think it's so simple. Companies would stop hiring workers if there are new regulations to say that people get to become full-time after such and such a time.

Rather I think it should go the other way (but this will never happen in Japan). I believe no one should be protected for the rest of their life once they become a full-time worker. Full-time workers should have to work to earn their living just like temps and contract workers. When the rules are the same for all, there will be more competition and thus more incentive to work productively, both from the full-time workers who now need to earn their keep, and the non-full time workers who now can see a path to being fairly rewarded for their labour.

It's through increases in productivity that labour would then see real wage rises.

But these sorts of fundamental reforms won't be happening in Japan, anytime soon.

2 ( +4 / -2 )

Companies would stop hiring workers if there are new regulations to say that people get to become full-time after such and such a time.

I think this is one part I disagree with you on. We need more full time workers so people feel that they have a future and can spend. fear of not having a job in 6 or 8 months is what stops people from spending. We need to give people security so they can go out and spend.

I believe no one should be protected for the rest of their life once they become a full-time worker. Full-time workers should have to work to earn their living just like temps and contract workers. When the rules are the same for all, there will be more competition and thus more incentive to work productively, both from the full-time workers who now need to earn their keep, and the non-full time workers who now can see a path to being fairly rewarded for their labour

Agree 100%. If someone is useless, they should be demoted or fired.

It's through increases in productivity that labour would then see real wage rises.

Nah, the fat cats at the top will never increase wages throught their own incentive. That's why we need regulation to force them to raise the minimum wage. Look, minimum wage in Canada is around 12 dollars; 15 in Australia. In the US, Clinton and Sanders called for a 15 dollar minimum wage. Japan is 780 JPY/Hour. That's around half. Its just too low.

But these sorts of fundamental reforms won't be happening in Japan, anytime soon.

Nor anytime later for that matter..

1 ( +3 / -2 )

Don't think it's so simple. Companies would stop hiring workers if there are new regulations to say that people get to become full-time after such and such a time.

How are companies going to function if they don't have workers?

2 ( +3 / -1 )

Abenomix is not dead.

-3 ( +2 / -5 )

I agree with both Aly and Strangerland.

Japan needs higher wages, especially for temp workers. It also needs to free companies to get rid of non-productive seishain. In times of rapid technological change and the ensuing disruption it brings, the idea of a job for life is antiquated. The seishain idea should be replaced with a three-five year contract. A new 18 year old seishain has a job until 2068(!)

Good workers will always be in demand somewhere, so they have little to fear. In fact their wages would be likely to increase with the increase in headhunting between companies for talent. The seishain system favours yes men and the mediocre.

4 ( +4 / -0 )

How are companies going to function if they don't have workers?

OK, I should have been more specific - at the margin companies would hire fewer new workers, because hiring a worker would then imply that the company being obliged to give that worker a job forever. That's a significant increase in risk for the company to take on.

I think this is one part I disagree with you on. We need more full time workers so people feel that they have a future and can spend.

I'd like to ask, what is a "full-time" worker?

I think it should be someone who works approx. 8 hours a day and is happy enough with their wage, but in Japan "full-time" means you've got a virtually guaranteed position until retirement age, and that comes at the cost of putting up with a possibly unsatisfactory wage level. People here typically choose that, because they are overly risk averse and crave stability.

Personally I don't think the until-retirement job guarantee is necessary in order to feel one has a future and can spend money. If one had a little less job security but a better wage (and were more motivated to work to earn one's keep) then I think one would actually feel more confident in oneself and the future.

In a typical gaijin's economy, useless or obselete companies go bankrupt, and people lose their jobs (or companies cut jobs to prevent going bankrupt). This model is better in the long-run than keeping zombie companies alive and forcing them to employ workers for poor wages while they make little profit and can't afford to pay any better, or simply have no incentive to compete for labour by hiking wages because there is little fear of losing productive workers to competition.

Here people are programmed to fear the uncertainty of ever changing jobs more than is justified, or healthy. I think Japan's labour laws for full-time staff foster a dependency mentality, not to mention demoralizing those without the employment guarantee.

Agree 100%. If someone is useless, they should be demoted or fired.

That's the thing in Japan - it's nigh on impossible to fire full-time staff.

the fat cats at the top will never increase wages throught their own incentive.

That's right, but employers are not supposed to be charity for labour providers. The key I feel is to make for competition. When fat cat employers need to pay more to keep their labour, they will do so if it is still in their best interests.

This lack of competition and favouring stability are the key issues that need to be addressed for economic improvements to be seen here, in my mind. I personally think the minimum wage is a relatively minor issue in comparison, and a hike strikes me as being a well-intentioned band-aid for the symptoms caused by the bigger issues.

But the mentality in this country is against competition, and in favour of protectionism for the vested interests. Mine is surely a gaijin's mentality, and probably considered un-Japanese. Probably things stay this way until a big bang forces change.

3 ( +4 / -1 )

useless or obselete companies go bankrupt, and people lose their jobs (or companies cut jobs to prevent going bankrupt). This model is better in the long-run than keeping zombie companies alive and forcing them to employ workers for poor wages while they make little profit and can't afford to pay any better, or simply have no incentive to compete for labour by hiking wages because there is little fear of losing productive workers to competition.

agree. but the answer is not to make everyone part time or temp. Its to fix the full time employment conditions.

That's right, but employers are not supposed to be charity for labour providers.

I didn't say they had to be. But if you have a population that low purchasing power, employers are also going to have problems selling their goods and services, hurting their profit margin and maybe causing social instability.

This lack of competition and favouring stability are the key issues that need to be addressed for economic improvements to be seen here, in my mind.

agree.

I personally think the minimum wage is a relatively minor issue in comparison, and a hike strikes me as being a well-intentioned band-aid for the symptoms caused by the bigger issues.

can't agree with that. I believe the minimum wage is the MAIN reason for Japan's deflation.

But the mentality in this country is against competition, and in favour of protectionism for the vested interests.

Preaching to the choir.

BTW, many apologies for the late reply. Work was hectic yesterday. Hope we can continue this thread. I do love to debate economics and finance.

0 ( +2 / -2 )

the answer is not to make everyone part time or temp. Its to fix the full time employment conditions.

I think we agree, whatever we want to call it. Incremental, piecemeal reforms have created labour market duality. The playing field should simply be level, and so long as it is level we could call it "full-time" employment or whatever, as far as I'm concerned.

But if you have a population that low purchasing power, employers are also going to have problems selling their goods and services

Agree, but higher wages don't grow on trees. Wages won't pick up sustainably without fundamental reforms coming first, I feel. Government could try to force businesses to just pay more (minimum wage hike), but I don't expect that would trigger this "virtuous cycle" that Abe wants. I just don't see how hiking minimum wages would resolve the issues with full-time employment. It's not like every contract worker is earning the minimum wage, is it?

That said, I'd be happy for this minimum wage hike to be tried, even though I think it won't help. If it does happen to work despite my lack of faith, that'd be great. But if it were tried and failed, then hopefully the leaders would agree that there are other issues that must be dealt with. Personally, I think it's fundamental labour market reforms that are key.

1 ( +2 / -1 )

Good morning mate. Again, deep apologies- work is a killer.

Agree, but higher wages don't grow on trees. Wages won't pick up sustainably without fundamental reforms coming first, I feel.

Even with fundamental reforms and a robust economy wages won't pick up in Japan. Its just different here. They cant even get rid of the service zangyo.

Government could try to force businesses to just pay more (minimum wage hike), but I don't expect that would trigger this "virtuous cycle" that Abe wants. I just don't see how hiking minimum wages would resolve the issues with full-time employment. It's not like every contract worker is earning the minimum wage, is it?

They don't have to. Even people earning wages higher than the minimum can't make ends meet. When the minimum wage is raised, all these other companies not paying minimum wage will have to raise too to compete.

. Personally, I think it's fundamental labour market reforms that are key.

For sure. But does it have to be one or the other? Why not have both? a combination of labour market reforms and minimum wage increases would be just what the economy needs.

-1 ( +1 / -2 )

Even with fundamental reforms and a robust economy wages won't pick up in Japan. Its just different here. They cant even get rid of the service zangyo.

Throw "changing the national work culture" in as part of fundamental reforms :) This isn't easy to change, but if Japan really really wanted to, it could.

For sure. But does it have to be one or the other? Why not have both?

So long as I get the policy I want I'd be happy (especially so if good results were subsequently observed). I personally don't like the minimum wage idea and fear it might act as a break on the economy (I could be wrong, that's just how I feel about it), but if the big bang fundamental reforms I want were done at the same time, it'd be OK.

When politics change like when Abe first came to power (I mean, in the days when his promises were given the benefit of the doubt) and now with the new government coming in the USA, it seems lots of people are seeing lots of policies and though they may not agree with all of them, they see enough to like and feel more confidence, and the markets go up and things look brighter all of a sudden. I'm not a religious man but despite it I pray that the new American government does enact some big reforms, achieve big results, and make people in stagnant places like here in Japan think that things could be better if only they open their arms to change! It'd give the courage to gutless politicians and bureaucrats and the working population that things could be much better, if they agree to make it so, rather than tinker around with minor changes in an incremental fashion...

0 ( +1 / -1 )

Throw "changing the national work culture" in as part of fundamental reforms :) This isn't easy to change, but if Japan really really wanted to, it could.

Agree.

I personally don't like the minimum wage idea and fear it might act as a break on the economy (I could be wrong, that's just how I feel about it), but if the big bang fundamental reforms I want were done at the same time, it'd be OK.

Fair enough. We just have to agree to disagree on the min.wage thing. But in your defense, some pretty serious economists would agree with you such as Peter Schiff, but this where I am more of a Kyle Bass type of person. I do believe that without a min wage raise we won't get economic recovery. But I agree with you that economic reform is also equally important.

I'm not a religious man but despite it I pray that the new American government does enact some big reforms, achieve big results, and make people in stagnant places like here in Japan think that things could be better if only they open their arms to change!

With this coming Administration, I wouldn't bet on it mate.

It'd give the courage to gutless politicians and bureaucrats and the working population that things could be much better

The problem is that the gutless politicians and bureaucrats think that everything is ok because things worked out for them, and the working population has more or less given up that things could be much better. In all honesty, I'm starting to go that way myself...

-2 ( +0 / -2 )

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