Japanese companies plan lower pay hike this year: Reuters poll

Sun Mar 26, 2017 7:12pm EDT
 
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By Tetsushi Kajimoto

TOKYO (Reuters) - An overwhelming majority of Japanese companies say they will raise wages at a slower pace than they did last year, a Reuters poll found, stymieing Prime Minister Shinzo Abe's attempts to boost the sluggish economy through higher wages and consumption.

As Japan's annual "shunto" wage hikes kicked in this month, the Reuters Corporate Survey found that only 19 percent of businesses said they would raise monthly wages by 2 percent or more, versus the 2.14 percent average hike at big firms seen last year.

The figure combines the automatic pay increase from Japan's seniority-based employment system, in which salary rises incrementally each year, with an additional hike in base wages.

This is the first broad survey gauging corporate Japan's stance on wages after most major firms on March 15 announced the results of their wage negations with unions, offering the lowest base pay hike in four years of about 0.3 percent.

In the monthly poll, conducted March 7-21, 63 percent of companies said they would raise wages 1-2 percent this year while 18 percent said gains would be less than 1 percent.

The survey showed 42 percent of firms plan no base pay hike at all this year. Some 40 percent plan to raise base pay less than 1 percent, with just 18 percent projecting an increase of 1 percent or more.

"Consumers face a tougher situation as prices will clearly rise reflecting the weaker yen and rebounding oil prices," said Taro Saito, director of economic research at NLI Research Institute, who reviewed the survey results.

Exports will support Japan, the world's third-largest economy, "but we cannot count on domestic demand," he said.   Continued...

 
Office workers are pictured through building windows during dusk in Tokyo March 3, 2015.   REUTERS/Issei Kato/File Photo