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Prime Minister Kishida has been saying raise wages, raise wages, but the decision to hike pay isn't done on the words of a prime minister. Rather it's because a company needs better human resources to achieve its growth potential. If the company isn't competitive, raising wages translates just to higher costs that will only worsen its situation.

9 Comments

Masayuki Kubota, chief strategist at Rakuten Securities. Prime Minister Fumio Kishida's administration has repeatedly urged companies to make maximum efforts to lift employee pay, which has failed to keep up with the fastest inflation in 40 years.

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Rather it's because a company needs better human resources to achieve its growth potential.

Company profits and productivity have been orthogonal to wages for decades.

So what potential and future Kubota-san sees for Japan Inc. beyond corporate exec aggrandizement does not exist.

-1 ( +4 / -5 )

Nice piece of corporate apology-ism.

Japanese companies, at their annual and highly formalized graduate recruitment campaigns, have long shown they are unwilling to offer higher wages for "better human resources" regardless of labor or skill shortages or other economic situations. The hiring is en-mass and everyone gets the same (low) salary.

4 ( +7 / -3 )

Precisely because Kishida knows his declarations have no weight on the decisions about wages is why he keeps making them, the government can shift the blame on companies, and companies will do the same back saying the government is doing nothing more thand declarations. At the end is everybody's fault but their own, and no increase is done.

0 ( +3 / -3 )

There's no way it's going to happen if you have a female shacho! Hahaha!

-4 ( +1 / -5 )

It should be possible for large companies to pay the lowest paid more (and the highest paid less to cover it if necessary) regardless of external financial issues, as the corporate wage pyramid is grotesquely and unfairly steep, skewed in favour of the well-paid. Some simply make enough profits to pay more, like Uniqlo recently did. Governments can often lean on large companies to force them to do this.

But for smaller companies, wages are determined/capped by profits. If inflation and costs increase, profits will go down, and wages are likely to be depressed. Low inflation (or deflation) and lower costs will see profits rise, and wages can then rise.

If Kishida wants wages to go up in the majority of Japanese businesses, he needs to lubricate supply chains, reduce costs and hammer down inflation. Getting rid of all the tourists didn't help - that was a lot of incoming cash that stopped coming in, hammering a number of sectors.

He also needs to make employment in Japan more flexible, with staff ability linked to pay rises, less hogging of underused staff by corporates, more self-employment and smart working, and better deals for part time workers. Abe was in the same position, asked for the same changes, failed to force companies to reform and didn't really get very far. Time will tell if Kishida just repeats this.

0 ( +0 / -0 )

Playing the ball just back to all the hard working employees, that’s quite insulting, dear mister. The real problem is besides an admitted lacking of innovations but simply the fact, that the money is now distributed globally such, that neither inbound nor foreign customers, the big average people anywhere, just can’t afford to buy all the products and services that are on offer. And following now, logically, even the bigger and some of the biggest players get into trouble and fire quite a percentage of their staff, so that those people also cannot buy as much as before. It’s a downwards spiral everywhere. So the political attempt to demand or force a more fair money distribution by wage raises or handouts is far from good or perfect, but currently the only way to break that downturn speed a little bit, so that the falling onto the ground is not lethal to everyone.

0 ( +0 / -0 )

Fumio you the guy in charge or what? Been takin a lotta lip from the sidelines thesedays.

0 ( +0 / -0 )

Privatize the profits, socialize the cost.

0 ( +0 / -0 )

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