business

Major firms bow to Abe's request to raise wages

40 Comments

Major Japanese firms, including Toyota and Panasonic, on Wednesday said they would boost employees' wages for the first time in years, heeding a call from the prime minister ahead of a sales tax rise next month.

The deal came as companies wrap up annual labor talks known as "shunto," or the "spring offensive".

The usually low-key negotiations were being closely watched to see if cash-rich firms would put more money in workers' pockets, amid worries about the tax hike slamming the brakes on growth.

Japan's auto sector was a key target, with all eyes on the world's biggest automaker Toyota which -- along with other major exporters -- has posted big profits on the back of sharply weaker yen since Prime Minister Shinzo Abe swept to power in late 2012.

On Wednesday, Toyota said it would raise employees pay by an average of 2,700 yen a month, while they would also get an average bonus worth about 6.8 months of their annual base wage -- a common pay structure in Japan.

The pay rise was less than the 4,000 yen a month demanded by Toyota's union, but it was the Camry and Corolla maker's first wage hike in six years.

The increase amounts to about a 0.8% rise over current pay levels.

Japan's No. 2 automaker Nissan also said its employees would get 3,500 yen more each month, and a bonus worth 5.6 months of regular pay.

Bonuses are usually paid out in a lump sum twice a year, but it's not guaranteed compensation.

The electronics sectors, hammered by losses in recent years, also moved with six major firms -- including Hitachi and Panasonic -- hiking wages by 2,000 yen a month, their biggest-ever increase.

Convenience store operator Lawson has agreed to its first wage rise in 12 years.

The focus would now shift from blue-chip firms to see if small and mid-sized companies, which employ the bulk of Japanese workers, would follow the lead on pay.

The seemingly small wage hikes are a major development in a country that has suffered deflation for years, meaning consumers rarely face higher prices for everyday goods.

Abe's economic growth blitz, dubbed Abenomics, is aimed at reversing falling prices and recent data suggest Tokyo is making headway in stoking lasting inflation, which would lead to higher prices.

Consumers are also getting set for a sales tax rise to 8% on April 1, up from 5%.

The hike is seen as crucial to shrinking Japan's massive national debt, but there are fears it could weigh on consumer spending and put the brakes on growth.

Abe has been calling on Japanese firms to raise salaries so workers would have more money to spend on everyday goods, a move seen as crucial to making his growth bid work.

But concerns gathered pace this week as revised growth data showed the world's third-largest economy expanded at a slower pace than initially thought last year.

On Wednesday, a key consumer confidence indicator dropped in February, with the data likely to stoke further concerns about consumers' willingness to spend.

© Japan Today

©2020 GPlusMedia Inc.

40 Comments
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The increase amounts to about a 0.8% rise over current pay levels.

Hardly going to offset the huge rise in energy costs brought on by the weaker yen, or the 3% increase in the consumption tax coming in April. Suggest folks there tighten their seats belts, I think its going to be a bumpy ride for the Japanese economy in the last nine months of 2014.

9 ( +13 / -4 )

I don't think there was ever any doubt about the big exporters, will be interesting to see how many of the smaller firms will increase wages or not. Anyone got any anecdotal evidence from their respective firm / industry?

2 ( +3 / -1 )

He slams companies on the head with his patriotism: be a good samurai and make sacrifices for the whole to make a great Japan. This is the third arrow. I'm a little surprised he actually got his way. Nobody thought he could do it. Still a long way to go.

5 ( +8 / -3 )

Companies are hoarding cash in the event of a downturn, but of course the question is how much is too much? Usually shareholders are beneficiaries of excess cash, not the workers.

3 ( +4 / -1 )

The key sentence is right in the middle of the article. 'The focus would now shift from blue-chip firms to see if small and mid-sized companies, which employ the bulk of Japanese workers, would follow the lead on pay.' The people with good jobs at major firms probably are not too worried about the 3% increase. It is the army of temporary workers and those around minimum wage who need the help.

5 ( +8 / -3 )

" The seemingly small wage hikes are a major development in a country that has suffered deflation for years, meaning consumers rarely face higher prices for everyday goods.

… Tokyo is making headway in stoking lasting inflation, which would lead to higher prices.

Consumers are also getting set for a sales tax rise to 8% on April 1, up from 5%. "

Utter STUPIDITY on Abe and his idiot cronies's part!

The meager wage rises will not even make a scratch in the real quality of life DECREASES that have already begun! The pittance of wage increases will FIRST be subject to revenue tax increases(more of the little people's money in his pocket to waste by things like loan guarantees to PLA and amakudari pet projects) AND the rising cost of imports really mean the people have LESS money available to spend on non-essentials as the real cost of ESSENTIALS have far outpaced the wage rise.

How many economic fallacies can Abe roll into one giant economic blunder? Un-flipping-believable!

7 ( +8 / -1 )

3500yen a month increase? Just over 100 yen a day? that is not a pay increase it is an insult.

6 ( +12 / -6 )

Abe's big government movement staggers forward, and reinforces the view that Japan is a more socialist country than communist China. Where is the 3rd arrow for some sustainable growth for a change?

paulinusa,

Usually shareholders are beneficiaries of excess cash, not the workers.

Indeed. I can't see that this sort of collusion between the government and big businesses will please shareholders much at all. In the long run it's not going to help the workers.

2 ( +2 / -0 )

my company has always given me a pay raise of 3,000 yen a month every year. i used to think that that was pitiful, but now i realize that i was better off than a majority of workers in japan. yahoooo!

but who knew the bonus at toyota was so huge?! my application is in the mail!

4 ( +4 / -0 )

gogogoMar. 13, 2014 - 09:25AM JST 3500yen a month increase? Just over 100 yen a day? that is not a pay increase it is an insult. ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''

If you based it on a 40 hour week basis, it works just under 22 yen an hour. It is an insult. What about all the people on the minimum wage which is one of the lowest in the civilised countries of the world ? Take in to account some of the highest prices for consumer goods in the world.

Has anyone noticed all the price increases for food items in the supermarkets lately ? Why ? What happens when the tax increases in April ? Unless the minimum wage goes up, a lot of people will be struggling.

1 ( +5 / -4 )

Its hard for me to believe that someone receiving a bonus equal to 5 months pay twice a year needs a pay rise at ALL... Its the guys who work blue collar jobs and get minimum wage, no seishain, no bonus that need the help.

2 ( +4 / -2 )

Its hard for me to believe that someone receiving a bonus equal to 5 months pay twice a year needs a pay rise at ALL...

That would be two bonuses equal to 5 months pay, not 5 months pay twice a year (for a total of 10 months pay).

1 ( +1 / -0 )

vicosaka, the minimum wage has been going up rather steadily over the past several years. In fact, it just went up last October :

http://www.mhlw.go.jp/stf/seisakunitsuite/bunya/koyou_roudou/roudoukijun/minimumichiran/index.html

Minimum wage in Tokyo is 869 yen. By comparison, minimum wage in S.korea is less than 500 yen (5000 won).

1 ( +4 / -3 )

That increase is more like a slap in the face then an actual increase.

0 ( +2 / -2 )

The amount of money of raise in wages might be few, and there not be raise in wages of the small and medium-sized enterprise.

The exporting company is the system that pays back the consumption tax from exports, and is obtaining the hefty profit. For instance, 200 billion yen/year is paid back to Toyota. The enterprise makes a profit further because the repayment money increases if the consumption tax rises. The reason why the economic organization encourages the consumption tax hike is a valuable refund application.

0 ( +1 / -1 )

The root of Japanese deflation was, at the beginning, the bust of the immense Bubble Economy created between 1985 and 1991. Between 1997 until 2010, deflation was a GOOD THING, but after that, deflation began to be a harmful phenomenon, except for pensioners. But, the problemsof Japanese economy will NOT be solved solely by creating INFLATION, but increasing fertility rates. If Japanese population keep declining, joined to INFLATIONARY environment, wage increase and low unemployment, this factors will compound the main problems of Japan's economy: LABOR SHORTAGE. I think Japanese corporations and Government should support working mothers across Japan, in order to promote maternity and increase in fertility rates.

2 ( +2 / -0 )

It may be that these blue chip players can raise wages by up to 1% after being requested to do so by the PM, but I can't think of any reason why SMB+ businesses could possibly be compelled to raise their wages.

2 ( +2 / -0 )

Notice they have defied union requests and set their own piddly amount of increase. We hit up our company for ¥9,000 per month through the company union and with the backing of the national union. Their decision is still pending, but I am not holding much hope for a substantial pay increase. I'm actually expecting it to be totally ignored. Bend over people and let Abe show you where his third arrow is going!

3 ( +8 / -5 )

I expect the big thumbs down, but take a look at yourselves.

and the legions of phelps keep whinging and moaning but choose to do nothing else, If you don't like it do something about, become industrious, become entrepreneurial, start a business or a company or get off your asses.

Up skill, re educate, do something to increase you income but don't just sit there whinging

You think everyone in business is a fat cat or something ?

Half of the working phleps are not worth what they get paid anyway.

-6 ( +6 / -12 )

" rickyvee at Mar. 13, 2014 - 09:29AM JST my company has always given me a pay raise of 3,000 yen a month every year. i used to think that that was pitiful, but now i realize that i was better off than a majority of workers in japan. yahoooo!"

You're talking about a longevity / performance increase, but this is about a base salary increase. For many companies there have been no base level increases at all for a decade, and companies have also revised their employment contract structures to actually require more work time for new, LOWER payscale structures which means actually working more for less, and some of those companies have also created schemes to reduce the workplace quality of life especially for the legacy workers in efforts to discourage the more senior employees from staying. Out with the old, in with the newer lower-paid workers which has also reduced the availability of "extra work" on which the annual (not semi-annual) bonus is based.

0 ( +1 / -1 )

I think Abenomics should be changed to "Dame-nomics."

3 ( +4 / -1 )

Great post StormR especially the last part, lol!

0 ( +4 / -4 )

We're not getting a brass farthing extra at my company. Belts will be tightened at Bloodaxe Towers.

Mr Abe will have to look elsewhere for someone to spend his way out of the mess he created.

Recession, here we come. Wouldn't it be surprising if Abe were to have to quit due to ill health just before the bad news comes in?

-5 ( +1 / -6 )

" Half of the working phleps are not worth what they get paid anyway."

StormR, I agree with most of the rest of your post, but not the last. Though surely there are parasitic types in the mix, saying it's half is outlandish. If you're referring to public sector workers that's more likely, but less so in private sector(productive).

1 ( +2 / -1 )

Great. And what about your average Taro who doesn't work for one of the top companies who gets paid much less than these folks? What about them? The tax increase is going to hurt them much more than these folks.

-1 ( +2 / -3 )

Abenomics is essentially the same as Obamanomics, and both are massive economic blunders.

0 ( +1 / -1 )

strangerland - true, but Im going to imagine that for many people, these 5month salary bonuses are almost the same as their yearly pay... remember the guys receiving these bonuses are not, by any means, on the minimum wage. Nowhere close.

-1 ( +0 / -1 )

Seems a few posters don't understand the ""J-Bonus"" system, heck most Japanese still don't either but more do from when I landed 20+yrs back.

The "bonus" is simply a way for companies to be able to CONTROL/LOWER workers wages to the tune of around 30% without having to consult workers, the so called bonuses are really WAGES disguised as a bonus, since the mid 90s more Japanese have found out the real truth when "bonuses" dropped & even disappeared at times.

Yes there were/are times when the bonus sometimes got about 6months for the year but for the most part its a system where by management can cut if need be and also ADD to the bonus instead of increasing wages, fortunately more in Japan are becoming wise to whats what, but still doesn't make many lives any better sadly

3 ( +6 / -3 )

Primarily a circle-jerk to fool the people. A salary increase? How much is the issue not the statement on the increase. You can't fool all the people all the time. Didn't Shinzo Abe read Lincoln?

0 ( +0 / -0 )

Primarily a circle-jerk to fool the people. A salary increase? How much is the issue not the statement on the increase. You can't fool all the people all the time. Didn't Shinzo Abe read Lincoln?

0 ( +0 / -0 )

Seems a few posters don't understand the ""J-Bonus"" system, heck most Japanese still don't either but more do from when I landed 20+yrs back.

The "bonus" is simply a way for companies to be able to CONTROL/LOWER workers wages to the tune of around 30% without having to consult workers, the so called bonuses are really WAGES disguised as a bonus, since the mid 90s more Japanese have found out the real truth when "bonuses" dropped & even disappeared at times.

This is a valid point. If you ask a worker about their yearly salary (年収), they will tell you the number that has been negotiated with their company. The bonus is not an amount tacked on top of this, the bonus comes out of this. So a worker getting five months 'bonus' actually has their yearly salary split into 17 parts. Each month they get 1/17, and twice a year they will get an additional payday that month of an additional 2.5/17 of their yearly salary. So 10 months a year they get 1/17, 2 months a year they get 3.5/17. So when companies cut 'bonuses', it actually comes directly out of the employees' yearly salaries, not out of any kind of additional monies.

0 ( +2 / -2 )

There's the debt problem. Then there's the changing demographics. Are there any other reasons to be desperate for growth? Because neither of these problems are the fault of the generation that's mostly going to feel the squeeze. I wonder when they'll start to get angry.

No wonder this government wants to bring in the kind of laws that would be useful for them if there were to be civil unrest.

0 ( +2 / -2 )

legions of phelps

legions of what now?

2 ( +2 / -0 )

during the bubble here, it was pretty common at big companies for brand new employess who just enetred the company to recieve a yearly bonus equal to 15 months. lol.... that makes my head hurt.

-1 ( +0 / -1 )

How about they just start enforcing overtime pay laws

2 ( +3 / -1 )

a country that has suffered deflation for years, meaning consumers rarely face higher prices for everyday goods

This makes no sense. Does Abe have a Soviet-style team of editors that look over articles before they go to press, to make sure that the "correct" perspective is always used? "Rarely fac[ing] higher prices" is exactly what consumers need, so the only people "suffering" from inflation are the central bankers who want to devalue the currency.

When prices tick downwards while wages levels are maintained, that's a win for the customers. Less work to buy more and better goods, and savings in the bank keeps its value. If you're a younger person saving money for the future, and then spending it to support your children, the steady consumer prices and stronger yen of the past 20 years are the ideal situation. But Abe wants to take, and take, and take. And then blame everything other than his administration for the problems he creates.

0 ( +0 / -0 )

What a phyrric victory this as the workers get to pay it all back in higher taxes.....

1 ( +2 / -1 )

@jerseyboy

Hardly going to offset the huge rise in energy costs brought on by the weaker yen, or the 3% increase in the consumption tax coming in April.

Nothing increases by 3%. The price of a product at 105 yen (inclusive of 5% consumption tax) increases to 108 yen, a 2.86% increase. The tax itself is being increased by 60%.

2 ( +2 / -0 )

ThonTaddeo

But Abe wants to take, and take, and take. And then blame everything other than his administration for the problems he creates.

You blame abe for where japan is at today ? The problems japan are facing date back way before he came to power, the continuous problem of over spending was there well before abe was out of high school, the problem of money being squandered on pet projects, the low consumption tax rate being not enough to service its rising numbers of beneficiaries, the problem of declining birth rate was also there,

Abe is trying to address problems, sometimes it takes a little pain to recover from injuries and damage but seems most of you don't want to take the medicine and blame the nurse trying to give you the meds for your sickness

5 ( +5 / -0 )

Higher wages... on paper.

There will also be a massive increase in hakken workers, which are the ones affected the most.

0 ( +1 / -1 )

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