Japanese firms commit to higher wages

Japanese firms commit to higher wages

TOKYO — Several large Japanese firms have indicated they are positive about raising employee wages amid Japan’s brightening economic prospects.

Executives at these companies made direct or indirect pledges for higher salaries at a New Year’s gathering for key Japanese business groups on Tuesday.

Chairman and CEO of Hitachi Hiroaki Nakanishi said Hitachi would actively consider increasing wages for employees based on the belief that “wages will help raise morale.”

Panasonic’s chairman Shusaku Nagae spoke in a similar vein, saying, “When performance is good, it only makes sense to return some of that to the workers.”

Daiwa Securities Group head Takashi Hibino added that higher wages would help pull the economy out of deflation, one of the key concerns for the Japanese economy.

From the insurance industry, Koichiro Watanabe, head of Dai-ichi Life Insurance — Japan’s third-largest life insurer — said that better wages can also play a significant role in boosting the rural economies.

Dai-ichi Life Insurance President Koichiro Watanabe (Bloomberg)

Dai-Ichi has already decided to raise the salaries of new sales hires by 20,000 yen ($167).

Japan’s central bank also showed its support for higher wages.

Bank of Japan Gov. Haruhiko Kuroda said salaries should rise accordingly with improving corporate earnings. And he called for unions to aggressively negotiate with the companies for better wages.

Bank of Japan Gov. Haruhiko Kuroda (Bloomberg)

This mark’s Kuroda’s second year attending the gathering, but the first time he made a speech.

It also is the first time that he has been so outspoken on his opinion about wages, the media said.

“If the 2 percent inflation target is to be met, wage hikes are imperative,” Kuroda stressed.

Higher wages commonly trigger consumption to ultimately bolster consumer prices.

But the wage hikes deployed by Japanese companies over the past two years have yet to jumpstart consumption.

Japan’s GDP growth in 2015 showed it avoided a recession, but both household income and spending dwindled toward the end of the year, according to government data.

Meanwhile, critics say a turnaround in consumption cannot be achieved unless smaller companies join the effort.

Akio Mimura who heads the Japan Chamber of Commerce and Industry said larger companies must refrain from cutting prices of their subcontractors to encourage small-sized companies to raise wages as well.

In fiscal year 2015, large Japanese companies collectively raised wages on stellar earnings, driven mostly by lower oil prices and a cheaper yen.

For this year, Noruma Securities projected an 8 percent pretax profit growth at major Japanese firms.


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