Japan firms resist Abe's calls to raise wages: Reuters poll
By James Topham
TOKYO (Reuters) - Japanese companies are largely ignoring Prime Minister Shinzo Abe's calls for higher wages in the face of an expected sales tax increase, a Reuters poll shows, underscoring the difficulties the government faces in trying to defeat entrenched deflation.
Abe will make a final decision on October 1 about whether to lift the tax to 8 percent from 5 percent in April. While necessary to bolster state coffers, the hike threatens to take the wind out of the success he has had with boosting stocks and weakening the yen.
Now that Japan Inc has begun to benefit from his bold monetary and fiscal policies, the prime minister wants companies to return the favour by lifting wages, which in turn will boost consumption and prices, and make the recovery sustainable.
"The government will consider bold steps in order to achieve a virtuous circle of rising profits, jobs and wages," Abe told a meeting on Friday of government, business and labour leaders. "I'd like to ask people from the industry and labour circles to make bold efforts for their part as well."
But the Reuters Corporate Survey shows firms remain averse to raising base pay, preferring if anything to boost bonuses - which can be scaled back later if the economy weakens.
Just under half of 266 companies answering a question on what they will do if the tax is raised as planned, said they will not respond with any increase to overall pay - including bonuses.
Only 13 percent plan to offset the tax hike with any pay increases, while 37 percent do not yet know what they will do, according to the survey which was conducted between August 30 and September 13.
"Due to earnings, we are just not in a position to raise wages," said an executive at a wholesale firm. Continued...