Survey Shows Japan Firms Resisting Wage Increase Pressure

Fewer than one in five Japanese companies plan to raise base wages in the coming business year, a Reuters survey shows, a stark sign that Prime Minister Shinzo Abe’s stimulus policies are still struggling to gain traction.

Some big names, like Toyota Motor Corp (7203.T), are expected to raise base pay, but the bulk of companies in the Reuters Corporate Survey say they will at most raise bonuses, which can easily be reversed if the economic recovery lapses.

While bonuses account for an average 17 percent of a Japanese worker’s total compensation, the survey points to diminished purchasing power for many workers.

Only 11 percent of firms said they plan to lift overall remuneration – bonuses plus any rise in base pay – by enough to cover a 3 percentage point rise in the national sales tax that takes effect April 1.

Abenomics has spurred economic growth and sharp climbs in corporate profits with bold monetary easing and government spending, but economists argue that base pay hikes, along with more capital spending, are key to transitioning to a self-sustaining recovery.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza