business

Major firms heed Abe's call to raise wages

58 Comments

The requested article has expired, and is no longer available. Any related articles, and user comments are shown below.

© 2015 AFP

©2021 GPlusMedia Inc.

58 Comments
Login to comment

Rather a slavish move by these companies: giving pay raises because the government says so...

Certainly, I have nothing against higher wages and extra 48000yen or 60000yen per year isn't much, but it's better than nothing.

Unfortunately, a raise pay invariably means a raise in taxes on that income, both federal and municipal, thereby negating, if not severely limiting whatever limited benefits from the meager pay increase.

The business community should pressure the Japanese government, at all levels, to further reduce taxes on profits, and income across the board. Tax cuts would give the wage increments more meaning, and impact

The government in the meantime needs to stop such interventionist tactics on private businesses. PM Abe's argument to business is essentially, "please alter your practices and policies so that my policies can work."

Government shouldn't be the driver of the economy, and the members of the Diet need to embrace more free market, free enterprise approaches so the economy can grow more robustly.

1 ( +7 / -6 )

The company I work for continues to balk at raising wages.

5 ( +6 / -1 )

I am pleasantly surprised that more firms than I had expected are raising wages with this year's labor talks.

There is also significant pressure on companies to raise wages this time around — companies that do so are perceived as performing better than those that don't and is reflected in share prices.

5 ( +5 / -0 )

"The government in the meantime needs to stop such interventionist tactics on private businesses."

If it weren't for government "intervention" over the years, a majority of those "private businesses" wouldn't be around today.

8 ( +9 / -1 )

I am going for 5% salary increase, net. But not due to Abe's plea on my company, due to the fall last year of the yen, his "fault" too !

Cannot complain myself but salary increase shall come with experience and performance, nothing else.

3 ( +4 / -1 )

And what about the largest employer in Japan? Are they raising wages? Put your money where your mouth is Abe.

6 ( +7 / -1 )

Raising salaries to match raising prices due to inflation makes no sense to me. Those that do not get raises lose out.

Why not make it a goal to not raise prices, and then salaries would not have to be raised? Salaries should be raised on merit, contribution, and work ethics, and not by some non-economists dream.

So sad this leadership.

8 ( +10 / -2 )

@Serrano Do you get summer and winter bonuses?

I think I read about a couple of companies named in the article above that have closed down shop (in towns where they were the major employer) and caused wholesale layoffs. I am rather surprised they are stepping up to the plate to even offer a little bit of something extra for their peons.

1 ( +1 / -0 )

The world’s biggest automaker Toyota said it would raise employees’ pay by an average of 4,000 yen a month—about 1.14% above current pay.

IMO, a 1.14% pay raise is hardly going to be enough to suddenly turn the fundamentals of the J-economy around. Especially not with costs of imports, like food, rising due to the weaker yen. Which will weaken even further in the BOJ does step up its level of intervention to try to hit the 2% goal. A perfect Catch-22.

4 ( +5 / -1 )

Unpaid overtime demands continue unabated.

4 ( +4 / -0 )

Incredible amount of media attention and spin being given to this story about incredibly trivial and meaningless amounts of money. As for the predictable "government interfering in the free market" line trotted out by the likes of the WSJ and other assorted "magical marketplace" cultists, if these companies don't like it they are always free to give back the trillions they have made DUE TO government intervention and currency manipulation.

6 ( +8 / -2 )

1.14% pay raise

Yet this number is still below the goal of 2% inflation so workers are still losing out. Just not as badly.

7 ( +8 / -1 )

What about a few crumbs for the 38% of the workforce scraping by day to day on short term contracts It is these forgotten people who are in need of salary increases, not seishaiin with their already high salaries and multi-month twice annual bonuses.

4 ( +5 / -1 )

Government shouldn't be the driver of the economy, and the members of the Diet need to embrace more free market, free enterprise approaches so the economy can grow more robustly.

It is amazing the free market fantasies that still exist out there in bubble land. The free marketers pixy dust beliefs lead to the near world wide depression we experienced in 2008. Somehow that seems to be overlooked now. Japan has been in an economic recession for 25 plus years, no free market magic has solved that. At least Abe is trying to get the Japanese economy out of the rut it has been in for decades. If it works or not remains to be seen, But 25 years of letting the free market solve the problem has completely failed. Capitalism is a manmade invention and it takes management to run it properly. It is not guided by the invisible hand of god despite the free marketers delusions that may indicate otherwise.

-2 ( +3 / -5 )

Isn't it about time to stop monetary easing? If the amount of money circulating in the country increases, it'll stimulate inflation, which would lead further hikes on wages. However, for people who work for rather small company would struggle further because commodity prices remain raising while their wages don't. I think it'd better if the government let the market act by itself for now.

2 ( +3 / -1 )

So, only two of the largest companies in Japan have agreed to increase salaries by less than a carton of beer per month (about ¥100 per hour), but the headline reads as if the whole country is playing to the tune of Abenomics? it's quite a contrast to the headlines of other companies laying off hundreds of staff, isn't it? It's just more smoke and mirrors from the Abe government.

They increase salaries by 1.5%, increase sales tax by 3% and increase prices by 5-10%. You don't have to be an economist to see the failure in this plan.

11 ( +12 / -1 )

If it weren't for government "intervention" over the years, a majority of those "private businesses" wouldn't be around today.

Then, JeffLee, it's even more imperative that the government ease off on its interventionist tactics. A lot of these big companies are way too dependent on government to help them.

Government intervention is also why there aren't any Ford, Chrysler, or Hyundai dealerships in Japan. It's why drivers have to buy new cars every seven years. The list goes on and on.

A liberalized economy is going to grow much faster than a government managed one.

3 ( +5 / -2 )

JBinJapan Government intervention is also why there aren't any Ford, Chrysler, or Hyundai dealerships in Japan------ Nonsense, There is nothing stopping overseas car companies setting up in Japan.

-1 ( +4 / -5 )

Well, sounds pretty good I guess. I work for a US company so my raise this year will probably only be around 1-2% as well..

0 ( +0 / -0 )

"about 1.14% above current pay."

Abe's policies have only robbed the 90% via taxes, real price inflation, and savings devaluation.

7 ( +7 / -0 )

JBinJapan Government intervention is also why there aren't any Ford, Chrysler, or Hyundai dealerships in Japan------ Nonsense, There is nothing stopping overseas car companies setting up in Japan.

"Nonsense". That's a bit overwrought.

The Japanese government is quite protectionist, to say the least. There may well be Fords, and other consumer market cars here, but, their presence is very, very small. The government certainly doesn't throw open the doors to the Japanese market all the widely.

There may well be no overt barrier to foreign made cars, but, the Japanese government does make it easy, does it?

You're missing the overall point of my post, however. Government intervention isn't always helpful. Certainly when it involves strong-arming private businesses, or kicking consumers in the teeth with taxes.

2 ( +4 / -2 )

That's funny.

Since 2009, Toyota, Nissan have both been laying off tens of thousands of workers and shutting down plants around the globe.

Toshiba has laid off even more, scaled back their TV production, their semiconductor unit, their PC production and let go of 12 percent of their US workforce.

Panasonic had major layoffs at their headquarters, 17,000 laid off globally in 2011 and closed 27 plants since then. Then announced 5000 more will be let go in the next three years starting in 2013. Their stock has been stumbling.

So, they announce they are raising wages, but I'm assuming it's the wages of those who are still lucky to have a job and that raising some wages won't mean others lose their jobs.

1 ( +1 / -0 )

Devalued currency, decimated savings, tax increases and a lifetime guarantee of part-time/temporary/low wage employment. "But hey, here is a 1.4% raise so you can call someone who cares."

7 ( +7 / -0 )

Once again we see the ignorant who know nothing of economics, business, or government giving their empty-headed, ideologically-colored opinions about all three.

if these companies don't like it they are always free to give back the trillions they have made DUE TO government intervention and currency manipulation.

Every yen the government has received since it was formed has come from these companies and their employees. Every building, every bridge, every school, government building has been funded by taxpayers, the largest of which are companies, and the remainder being paid for with taxed collected from people companies employee. Make sense? And yes, when workers see their paltry raises, they will see about half of that raise go back to the government, the rest will be absorbed by the inflation the government has engineered to pay for it's financial incompetence.

The government isn't manipulating currency to help companies, you seem to forget that 60% of what Japanese companies produce is sold in Japan, and any decrease in the value of the yen hits this market hard, as well as the companies that sell to this market. The government is manipulating currency because they are trying to devalue the 1000 trillion yen in debt they have to pay interest on.

It is amazing the free market fantasies that still exist out there in bubble land. The free marketers pixy dust beliefs lead to the near world wide depression we experienced in 2008.

Do you really think that the free market had anything at all to do with the 2008 recession? Which "free market" are you talking about? There is no "free market" in any country in the world. Every market is regulated to an extent, and America's market, particularly the financial markets, are among the most heavily regulated. The 2008 collapse was due to large numbers of consumers defaulting on loans, and these loans had been traded as securities by financial firms. They became less secure when people stopped making they payments they promised to make. These people should not have been given loans in the first place, yet government regulations like the FCRA, FCBA, and FCA, along with a little known regulation known as the CRA all worked together to allow people with low incomes and bad credit to apply and be approved for loans they could not afford to repay. The "free market" had nothing at all to do with it.

The fact remains that the government exists to serve and protect, not to rule and regulate for it's own financial benefit, or for the personal power of the lucky few who run the various departments and agencies, which is ever more the case. Take a look at these large companies, and see where their money goes. Would you be surprised to learn that these companies pay more in tax than they do in payroll? The government already takes most of the profit they earn, and then tells them that they have to raise wages as well?

-3 ( +5 / -8 )

4000 yen a month and they're patting themselves on the back? This 'increase' in wages means they'll be able to say they have done their part for society (while hacking bonuses and still using the illegal zangyou sabisu), the government will say the 'third arrow' is working, and all blame for the lack of support of the non 1% will fall on those who are suffering as a result of Abe's economic changes.

0 ( +3 / -3 )

"A liberalized economy is going to grow much faster than a government managed one."

The opposite is more often true. When Japan's economy was more fully govt protected and managed, in the postwar era, it was a stellar performer and the envy of the world. Growth skyrocketed.

After the 1991 blowout, created by the private financial sector, numerous moves have been made to "liberalize" and "globaize" the economy. The results have been negative or sluggish growth.

China's communist dictatorship "manages" an economy where 7% growth is deemed "sluggish." All its banks are govt owned, we should note.

-2 ( +3 / -5 )

Every yen the government has received since it was formed has come from these companies and their employees. Every building, every bridge, every school, government building has been funded by taxpayers, the largest of which are companies, and the remainder being paid for with taxed collected from people companies employee. Make sense?

Um, how about you ask yourself the "Make sense?" question? Because clearly you never have. Where exactly do you think the taxpayer gets his yen from? His counterfeit machine? Taxpayer money funds nothing and it hasn't since the end of the gold standard. Claiming it does like the idiot Margaret Thatcher did is no different from saying the sun goes around the earth and the earth is flat.

As for the complaints about government interference in the "free market" they may be valid. I hear when Shinzo Abe goes on yet another of his never-ending foreign trade missions and takes dozens of top level Japanese corporate executives along with him, he has to point a gun at their heads to make them go. They say "Please Shinzo, stop intervening and interfering in our businesses, we want the invisible hand of the magical marketplace to sell our submarines and coal plants and cars, not you."

2 ( +2 / -0 )

Prime Minister Shinzo Abe’s drive to get Japan economically ship-shape with a mix of easy money and fiscal largesse

Get economically ship-shape by fiscal largesse??? You cannot be serious!

© 2015 AFP

Oh. I see... it's another AFP article....

has born some fruit since its launch two years ago, in the form of soaring stock prices and a falling currency.

Fruitful indeed, so long as you have stocks and little yen, like most residents of Japan do, right. Oh...

the “virtuous circle” of growth that the premier’s signature “Abenomics” plan envisages.

It's a destined-to-fail attempt at central planning.

it appeared the prime minister was at least partially getting his way.

Centrally commanded pay hikes are not going to happen year after year. This is not a sustainable growth strategy.

The plunge in the value of the yen, while helping exporters, reduced spending power at home because it made imports more expensive.

At least AFP gets this much right, I guess.

Japan has been in an economic recession for 25 plus years, no free market magic has solved that.

There has been no free market... Japan's economy is over-regulated, not over-free.

Capitalism is a manmade invention and it takes management to run it properly.

Capitalism is the best option known to us, and the more the government interferes the worse the results get. Look at Venezuela. Venezuela is not a free-market basket case, it is a socialist basket case.

It is not guided by the invisible hand of god despite the free marketers delusions that may indicate otherwise.

It's not God, it's just individual people acting in their best interests, sending price signals to one another.

Do you know that there is a shortage of butter in Japan, despite global dairy prices plunging over the past year? This is because Japan does not have free markets, but central planning instead. Japan would have enough butter if the government would just get out of the way. Butter is just a case in point. The Chinese communists are more capitalist than Japan, and that's because the Chinese observed what the Japanese have been doing wrong.

2 ( +3 / -1 )

Receiving that much of salary increase! Some people are really lucky! Monku shite nai de kudasai! I'm out of work right now simply because I couldn't produce proof that I was that sick since I didn't see a doctor and relied merely on the OTC meds. Then I was told they don't believe that I got really sick. My response was I can't continue working if they don't trust me. So now, I'm out of work, again. And everybody is complaining of the increase. Some people have the luck and don't appreciate them. Haaay!

-1 ( +1 / -2 )

Sorry I don't see any good news here any where except:

The firm(Toyota) now expects to book a record 2.13 trillion yen net profit in the fiscal year to March.

And Toyota agrees to an idly piddly tiny winy "raise" of Y4000/mth a tad over 1% WTF!!!

And this has been going on for ages, not just Japan, big businesses make RECORD PROFITS & little in any REAL raises follow for the working stiffs who help realize those record profits!!

This is ALL still in the NEGATIVE for people working in Japan, the Yen has plummeted, the consumption tax up 3 percentage points, that's a 60% increase.

But yeah for those that get a couple thousand extra yen per month, YOU "WON".....................NOT!!!

0 ( +0 / -0 )

whatever happened to abe's "third arrow"? without that economy is doomed.

1 ( +1 / -0 )

The Toyoto raise in total pay (including bonuses) is 3.2%...nothing to jeer at. but go right ahead. don't let facts interrupt your cheering against the Japanese economy.

-1 ( +1 / -2 )

so the pay rises will be lucky to cover the tax rise and inflation rate, so while prices may increase it wont make people spend more as there disposable income is the same or even slightly less.

2 ( +2 / -0 )

Latest inflation guidance from BoJ was for inflation to be flat and maybe even negative for the next few months due to oil. the 2% goal, is just that...a GOAL. It isn't going to be reached for a while. This raise increase a good thing. a VERY good thing.

-2 ( +0 / -2 )

The opposite is more often true. When Japan's economy was more fully govt protected and managed, in the postwar era, it was a stellar performer and the envy of the world. Growth skyrocketed.

Wrong, wrong, wrong. Japan's growth skyrocketed in in the postwar era because Japan's labor costs were lower than those in America and Europe, and therefore they were able to produce and sell goods for a lower price. Next, Japan had no other competitors in the low-priced labor market, Japan was the only industrialised economy in Asia. We also can't forget the wonderful Japan Inc. practice of dumping products in the American and European markets and selling them at a loss so as to drive their American and European competitors out of business. "Government protection and management" had absolutely, utterly, nothing whatsoever to do with Japan's economic success, Japan was the most aggressively capitalist country in the post-war era, and that was the cause of Japan's success.

The most highly "government protected and managed" post-war era economy was the UK, when 80% of British industry was nationalised. Few people would say that the UK's economy was a stellar performer in the post-war era, would they?

3 ( +6 / -3 )

This is what Japanese want from Abe. For a nationalist like Abe, poverty is a disgrace. They want him to hit those compaies in the head and give out more of the mountain of cash them have in banks, Japanese are not interested in dying in US started wars all over the world.

-1 ( +1 / -2 )

There was a segment on the TV yesterday night where they showed a company which have increased the base payment for its young employees under 30 by 4,000¥ as a means to spur new wave/type of consumption driven by young people. When the TV reporter asked some of them, what they do intend to do with the extra money, all of the interviewed said that they would save it (which does not imply that all of them would do so). Then, the program went on with a segment on several part-timers working as contract workers sent by a dispatch companies at elderly homes. The dispatch company tried to negotiate a 50¥ increase in their payment with the elderly home owner, but the manager of the elderly home said that it is impossible for him to pay that extra 50¥ a day per worker. So....... Looking around me, all of those with internationally competitive skill sets have left or are in process of leaving the country. Only people invested in family with a native of Japan and/or some small business here, even though not necessary, stay in Japan. From all of those foreign students who have graduated with me from one of the top 3 universities here, only a handful are still employed Japan. Smarter people jumped the ship long ago and currently in well paid positions.

2 ( +2 / -0 )

They had similar reports on the wide shows this morning.

Toyota increased the wages but the smaller companies supplying them won't see any increases and Toyota sources more parts overseas now.

Most people interviewed are not sure what the future will hold.

Right after that was a report about queues at tills and new systems that will make the checkout quicker. In short profits go towards tech and not workers.

0 ( +0 / -0 )

They want him to hit those compaies in the head and give out more of the mountain of cash them have in banks,

How much cash do the banks really have? Almost 50% of the Japanese bank "assets" are government debt, in the form of Japan Government Bonds. Another large percentage of Japanese bank "assets" are the debts racked up over two decades by the large domestic Japanese companies, like Sharp, Panasonic, Hitachi, and others. The banks have been rolling over these companies' debt for a long time, in Olympus' case, their debt dates back to the collapse of the "bubble economy". Then you have to subtract the other debts, like mortgages, car loans, etc. In the end, you will find out that Japanese banks, like banks around the world, actually hold little in the way of ready cash, the majority of their assets are usually debt. If you deposit 10,000 yen in the bank, the bank loans that money out to someone else, and charges interest on it. If everyone who has money deposited in the banks right now withdrew it today, about 90% of these people would find that the bank would not have enough money to cover their deposits. That's they way it is. In America, the Volcker rule requires that banks have 8% of their assets in cash, so they can pay depositors who want to withdraw their money, the other 92% of the banks assets are going to be debt, bonds, and other "assets".

China's communist dictatorship "manages" an economy where 7% growth is deemed "sluggish." All its banks are govt owned, we should note.

And the average salary in China is about 1/10th that of Japan, or 1/15th that of America. You don't see floods of Japanese, Americans, or Europeans trying to get into China, do you? But you see countless Chinese doing anything even everything they can to get out of China, and into Japan, America, or Europe, right? Many die in the process of trying to get out of China. Been to the immigration office in Tokyo lately? Tell me, if China is such a great place, why are more than half the people lined up in Japan's immigration offices Chinese?

Funny,

-2 ( +1 / -3 )

Wait about 7 more months for the other shoe to fall....the consumption tax increase...bye-bye 1.14% pay increase. What a friggin joke!

1 ( +1 / -0 )

I've just seen that Nissan have just given a 8000 wage pay rise, thats about £27 per month divide that by XX divide that into 40 hours per week divide into hourly wage and thats whopping 18 pence per hour !! whoopi doo. I think that 8000 yen should be per week not month!!

1 ( +1 / -0 )

Pay rise Abenomics in Japan make simple:

Big exporters....1% to 2% pay rise. Big importers....no pay rise. Small suppliers to exporters.....0.1 to 1% pay rise. Small suppliers to importers.....no pay rise....maybe retrenchment. SME supplying local market.....no pay rise...maybe retrenchment. Government civil servants......no pay rise....no retrenchment....business as usual. Salarymen......feeling the pinch of consumption tax hike....little to no pay rise. Temporary workers.....feeling the competition from cheap "foreign labor" disguised as "exchange program talents". Foreign tourists.......15% from cheap Yen. Retailers to foreign tourists.......30% more profits....pay rise...probably 5% to 10%. Housewives feeling poorer...squeezed husband take-home pay.....more quarrels over allocation.
0 ( +0 / -0 )

That's funny! I was just reading in another japanese newspaper that Sharp is going to fire 10% of its workforce worldwide (about 5,000 people) and cut salaries by a similar margin of 8-10%. It seems that, these 'Japanese companies' mentioned in the article could be the only two.

0 ( +1 / -1 )

Only people invested in family with a native of Japan and/or some small business here, even though not necessary, stay in Japan. From all of those foreign students who have graduated with me from one of the top 3 universities here, only a handful are still employed Japan. Smarter people jumped the ship long ago and currently in well paid positions.

how to -- truer words were never spoken.

0 ( +1 / -1 )

In the end, you will find out that Japanese banks, like banks around the world, actually hold little in the way of ready cash, the majority of their assets are usually debt.

Wow, on Japan Today you can learn that bank assets are "usually" debts and not cash. I look forward to learning more exciting new facts next time I check the comments.

-1 ( +1 / -2 )

Wow, on Japan Today you can learn that bank assets are "usually" debts and not cash. I look forward to learning more exciting new facts next time I check the comments.

Read the quote, Einstein. "They want him to hit those companies in the head and give out more of the mountain of cash them have in banks,

For some reason, people believe that companies are sitting on record amounts of cash, and are refusing to invest it. On the surface, this looks true, but in reality, it is not. Companies are sitting on larger amounts of cash than before, but only because governments have increased the money supply. America increased their money supply by 140% since 2008, where do you think this money goes? If you look at the amount of money being held by companies relative to the amount of money in the system, companies are not holding on to any more money than they did in the past. And if the companies did spend this cash, where would they spend it? What would be the result? The money would move mainly from one company to the other, and they would be holding just as much as they did before. This is fundamental economics.

And if these companies did put all this money in the banks, these same banks immediately loan out or reinvest the money. Your typical bank holds only 6-7% of it's assets in cash. But many people believe that banks hold most of the world's money, and refuse to lend it to ordinary people. These people don't realise that the buildings they work in, the computers in their offices, the chairs and desks they work at, are for the most part entirely financed by banks, and that every single thing they drive, ride in, fly on, eat, sit on, sleep in, walk over, look through, or jump over has been paid for with money, and that some portion of this money was borrowed from a a bank.

Companies and banks do not sit on money if they can help it, as money which is not being used is useless. But, on the other hand, companies and banks are not like governments, which can print out more money when their supply runs low. Companies and banks will only invest their money if they can earn a return on it. If companies are not investing their money in Japan or Japanese workers, it is because they believe that they will not get a return on this money. And with the demographics of Japan being as they are, it appears that they are making the correct choice.

-2 ( +2 / -4 )

Hi, how to get gimelim......There is a trade off, the burn out rate through physical or emotional stress is high. As a quant, expertise in finance, analysis and strategy need a constant focus updating skills most critical for keeping your career alive and moving forward. Communication, relationship management and especially business knowledge also need particular close attention. Quarterly performance management along with target scorecards are par for the course. The rewards are high six figures, bonuses in excess of annual salaries, with percentages paid in cash. I miss my family in Japan although I have a English family in UK. A tireless work ethic pays off, some lucky breaks help too, and mental toughness. Tokyo would not offer the opportunities, seniority or success for a person of my age.....

Official data have shown that Japanese household spending in 2014 declined at its fastest pace in eight years, underscoring how badly clobbered the average person felt. ......Frankly doesn't inspire confidence, good luck to you.

1 ( +1 / -0 )

Major firms on Wednesday announced pay rises for workers after sustained pressure from the government in its attempt to push up prices in long-deflationary Japan.

It's not a simple "pay rises" for this is "base up" or ”ベア’” which along with the regular annual pay raises (定昇 about 2% per year). During the deflationary cycle, these "Spring offensive" didn't even discuss about "base up" until Abenomics kicked in.

-3 ( +1 / -4 )

@Sangetsu03

"Japan's growth skyrocketed in in the postwar era because Japan's labor costs were lower than those in America and Europe"

Funny how that didn't help the Philippines, which had a lot of Western investment at the time. Manila was the region's busiest airport in the postwar era.

Mind you, being a former US colony the Philippines, unlike Japan, wasn't able to do much to protect its domestic industries. The Americans touted an open market environment and "free trade," which helped push the Philippines economy right down the hole.

"And the average salary in China is about 1/10th that of Japan,..."

Once again, you've shifted the goal posts in the debate. The argument was that economies need to be "liberalized" in order to achieve high grow rates. Modern history mainly shows the opposite to be true, China now and Japan previously being cases in point.

-3 ( +0 / -3 )

I’m surprised no one has mentioned the price fixing that goes on in Japan in relation to goods and services. Perhaps, this is why companies are having “difficulties” raising wages and government feels the need to “intervene”.

0 ( +0 / -0 )

Funny how that didn't help the Philippines, which had a lot of Western investment at the time. Manila was the region's busiest airport in the postwar era.

Japan was an industrial country from the end of the 19th century, the Philippines was not. In 1960 Japan' labor cost was 1/3 that of America's, and less than half of the UK's. Even post-war Italy's labor costs were a third higher than Japan's. People bought Japanese goods because they were cheaper than domestic goods, and for no other reason, back in those days Japanese products did not have a reputation for quality. "Made in Japan" was a cliche, and all of the cheap junk sold in "Five-and-Dime" stores was made in Japan, much like the Chinese goods sold in Walmart today. China's economic success today is also entirely due to lower labor costs, no one buys Chinese goods for their quality, not even the Chinese.

-2 ( +1 / -3 )

"Japan was an industrial country from the end of the 19th century"

So what? in 1945, Japan's industries were battered and fully destroyed, and its economy was non-existent. It grew postwar thanks to steep tariffs and government guidance, with the govt dictating to the private sectors what products they would produce and export. The Philippines, with US influence, adopted a more market approach...and look what happened.LOL.

"China's economic success today is also entirely due to lower labor costs"

Costs that are continuously rising, as is the number of middle class members and millionaires. Private consumption is increasingly driving the economy and soon will be the main driver.

Anyway, lower costs now can be easily found in Vietnam and Indonesia.

-1 ( +0 / -1 )

So what? in 1945, Japan's industries were battered and fully destroyed, and its economy was non-existent. It grew postwar thanks to steep tariffs and government guidance, with the govt dictating to the private sectors what products they would produce and export. The Philippines, with US influence, adopted a more market approach...and look what happened.LOL.

Right, LOL is what I have to do when I read your posts. The Philippines is not Japan, and the Philippines did not "adopt a market approach". As is usual in third-world countries, the Philippine government looted all it could steal from the private sector. Post-war Japan was not run by the government, it was run by industry and the banks, with the government going along for the ride.

Costs that are continuously rising, as is the number of middle class members and millionaires. Private consumption is increasingly driving the economy and soon will be the main driver.

Almost every bit of China's recent growth has been fuelled by borrowed money, China has the largest corporate debt in the world right now. The percentage of income Chinese companies spend to service their debts is more than many can afford, and these "government owned" banks have taken to rolling over corporate debts. This might be a good thing if it weren't for the fact the corporate borrowing is not being reigned in. 7% growth might sound like a good thing, but it is not enough for Chinese companies to repay their debts and cover their operations.

Have you been to China? Have you tried to see what opening a business is like? Almost every official and regulator in the process must be given a "gift" if you want to see your business opened. Once your business is opened, you can keep out competitors by paying these same officials to deny them permits and licenses. You can pay off inspectors to avoid safety and cleanliness regulations, like McDonald's food processor did last year. A lot of new Chinese middle-class people and millionaires make their money from graft and corruption. Wonderful place China is.

Anyway, lower costs now can be easily found in Vietnam and Indonesia.

And jobs are now moving there as well.

-2 ( +2 / -4 )

@Sangetsu03

"Post-war Japan was not run by the government, it was run by industry and the banks, with the government going along for the ride."

Thanks for that sentence. It is clear proof you know absolutely nothing about the economic development of postwar Japan, (and everything else you post here).

I could recommend some books for you to read, such as Jon Hallidays "A Political History of Japanese Capitalism." Or I could simply point you to Wiki's article on the Japanese post-war economic miracle. Near top is the sentence:

"(The miracle) occurred partly due to the aid and assistance of the United States, but chiefly due to the economic interventionism of the Japanese government."

To believe that not one but two govts took a back seat role during this most spectacular economic feats in modern history is simply delusional.

-2 ( +0 / -2 )

The opposite is more often true. When Japan's economy was more fully govt protected and managed, in the postwar era, it was a stellar performer and the envy of the world. Growth skyrocketed.

Look at the last 20 years or so. Better still look at the last 3 years. The government may have done a stellar job after the war, but, has long since dropped the ball. Japan's economy is over-regulated, its big industrial powers too sheltered, and is being crushed by public debt.

After the 1991 blowout, created by the private financial sector, numerous moves have been made to "liberalize" and "globaize" the economy. The results have been negative or sluggish growth.

Clearly not enough moves have been made to "liberalize" and "globalize". Japan's entrepreneurial class remains relatively small considering its population. Business taxes were at 40% until recently, and are still too high at %35. The government is strong-arming companies into giving higher wages instead of foster a better business environment that makes substantial wage increases feasible.

The government's track record, in this century, has been lackluster at best. Deficit spending, and taxation aren't the paths to growth.

China's communist dictatorship "manages" an economy where 7% growth is deemed "sluggish." All its banks are govt owned, we should note.

Glad you see the communist party in China as it is. However, the government also favours state-owned enterprises over privately held firms. Access to that economy is very restricted as well.

Also, note, that China's growth began with a loosening (however slight) of government controls. China also has a very strong entrepreneurial culture. Though governed by a thug-like communist party, the Chinese people are, at heart, capitalists.

The financial fiascos of the 90s, and 2008 were not a representation of free market economics; they were an aberration of them. You're dwelling in the past rather than looking at the potential that free market economics has to deliver people from poverty, and save economies.

http://www.economist.com/news/21631956-entrepreneurs-will-transform-africa-says-tony-elumelu-chairman-heirs-holdings-and

The government is comprised of legmen working on the behalf of vested interests, not for the economy at large. Looking to it to drive the economy is a big mistake. Better that it move aside, and allow businesses, consumers, and investors do the heavy lifting.

-1 ( +0 / -1 )

Bank Power and Cash Holdings: Evidence from Japan.....

The Abstract is relevant....

Using industrial firms from the United States, Germany and Japan, we examine the effect of bank power on cash holdings. We show that Japanese firms hold more cash than U.S. or German firms. We also document that Japanese cash balances are affected by the monopoly power of banks. During periods with powerful banks, firms’ high cash holdings are consistent with banks extracting rents. When banks weakened, Japanese cash levels became more like U.S. firms. We conclude that strong Japanese banks persuade firms to hold large cash balances. This is contrary to widely held beliefs about the Japanese governance system.

http://faculty.msb.edu/lfp/ic100400-rfs.pdf

0 ( +0 / -0 )

"The financial fiascos of the 90s, and 2008 were not a representation of free market economics; they were an aberration of them."

Absolutely...wrong. They were "FINANCIAL" crises, not "fiscal" crises, for one... and they took place in countries where the financial sectors were nearly entirely run by profit-seeking private-sector firms operating wholly on free-market principles with light-touch regulation.

China's banks are not. They are govt controlled and owned. And China doesn't have financial crises despite a rocketing economy. Lucky them, poor us.

0 ( +0 / -0 )

Absolutely...wrong. They were "FINANCIAL" crises, not "fiscal" crises, for one... and they took place in countries where the financial sectors were nearly entirely run by profit-seeking private-sector firms operating wholly on free-market principles with light-touch regulation.

JeffLee, the font here is small-ish. I used the word "FIASCO" not fiscal. I have to disagree. Free market doesn't mean "anything goes". Those private sector firms didn't follow the rules, clearly.

The "financial" instruments that had been peddled weren't the result of sound business planning, or practices. They engaged in a glorified form of gambling, and guesswork. Totally unsound.

Read:

http://archive.wired.com/techbiz/it/magazine/17-03/wp_quant?currentPage=all

The bankers you deride (and rightly so) aren't paragons of free market economic. They tried to make profits using very dubious ideas, and ethereal concepts that could never work in the real world.

In fact, the US government had been warned in 1992 that the financial crisis would happen. This shows that government isn't always acting in the interests of the economy, or even thinking of them.

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/25/AR2009052502108.html

China's banks are not. They are govt controlled and owned. And China doesn't have financial crises despite a rocketing economy. Lucky them, poor us.

Yes, but, there's a looming debt crisis in China which could send its economy off the rails. Also, China's governments favour mostly state owned enterprises. There's also massive abuses of its labour force which haven't been fully addressed or resolved.

Workers who assemble our smartphones have contracted cancer, and other illnesses forced to work insanely long hours, all while under the communist government's watchful eyes. The state certainly isn't going all out to help them. The Chinese government, for centuries, has been callous to the needs of its people. Peaceful protest is often met with extreme violence

I'd say, lucky US, poor THEM.

When you think of free market economics think more of people like Bill Gates, Dave Thomas (founder of Wendy's), Mark Cuban, Elon Musk, TD Bank CEO Ed Clark. Read up on thinkers like Adam Smith, and Friedrich Hayek.

Better still, think of people you know who are self-employed, or have started a small business of some kind. What's wrong with being more self-reliant, and better paid for a day's work?

Quantitative easing, stimulus spending, and over-regulation haven't led to substantially higher salaries, or investments. Higher consumption taxes only limit the buying power of those with median or low incomes. PM Abe talks about a "virtuous cycle of consumption" yet does all he can to prevent that from happening.

The Japanese government, like most governments, have no sense of how the average person experiences the economy. The members of the Diet by their wealth, their salaries, and gold-plate state retirement packages, are isolated from the economy.

Your trust in the fallible people who comprise the government is misplaced. Better to look to entrepreneurs, workers, and investors to revive the economy than an untrustworthy institution that has achieved nothing but economic malaise.

0 ( +0 / -0 )

Login to leave a comment

Facebook users

Use your Facebook account to login or register with JapanToday. By doing so, you will also receive an email inviting you to receive our news alerts.

Facebook Connect

Login with your JapanToday account

User registration

Articles, Offers & Useful Resources

A mix of what's trending on our other sites