”Wage Talks Won’t Help Japan’s Abe”

”Shinzo Abe and Haruhiko Kuroda shouldn’t look to spring wage talks for much help in spurring inflation and economic growth in Japan.

If anything, the picture emerging from the negotiations between some of Japan’s biggest companies and their unions is one of stagnation and slim raises. And the talks, most of which conclude next month, are taking place as a strengthening yen risks pushing down the earnings growth — and stock prices — of Japanese exporters.

The paltry increases on the table mean that the prime minister and Bank of Japan governor’s goals of reaching a 2 percent inflation target aren’t being helped by wage gains, which both repeatedly have pushed for. Earnings, including bonuses and overtime pay, fell in 2015 for a fourth consecutive year after accounting for inflation.

“The risk is on the downside for a pay hike at this year’s spring wage talks,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute in Tokyo. “Is it any wonder that more businesses will become cautious about pay rises that add to costs, if gains in the yen and declines in stocks intensify uncertainty.”

Shinke and Taro Saito at the NLI Research Institute forecast labor unions will win an average increase of about 2.1 percent in monthly wages, while Yoshitaka Suda at Nomura Holdings Inc. projects an increase of 2.15 percent.

Yet when seniority-based increases are taken out, the rise in salaries may only be about 0.6 percent, according to Suda and Saito. That’s even less than the 0.69 percent gain last year. And the overall figures that include seniority adjustments also are down from last year’s 2.2 percent bump, released by the Japanese Trade Union Confederation, known as Rengo…………..”

Source: Bloomberg Business News – http://www.bloomberg.com/news/articles/2016-02-25/slim-raises-at-japan-s-spring-wage-talks-no-help-to-abe-kuroda

The Board Director Training Institute (BDTI) is a "public interest" nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit. Read a summary about BDTI here, and see a menu of its services for both corporations and investors here.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.