Friday, October 18, 2013
Biz Chiefs Tone Down Opposition To Abe's Wage Hike Push
TOKYO (Nikkei)--Business leaders appear more open to government calls for higher wages, but many seem reluctant to commit to any specific plans just yet.
Consequently, sparks will likely fly between government and the business community when spring negotiations between management and labor kick off.
Government officials, corporate managers and labor representatives met Thursday to discuss wage increases, which Prime Minister Shinzo Abe sees as necessary to help the economy defeat deflation.
"We'll consider ways to return earnings growth in the form of remuneration," said Toyota Motor Corp. (7203) President Akio Toyoda. Likewise, Hitachi Ltd. (6501) Chairman Takashi Kawamura noted that base wage increases "will be examined as an extremely important option."
Pay raises are determined through negotiations between management and labor at each company. When Abe began urging firms to lift wages, Hiromasa Yonekura, chairman of the nation's most powerful business lobby, the Japan Business Federation, and others voiced objection to government intervention on the matter.
While opposition appears to be losing steam, corporate executives say that such increases should be offered a year after profits are actually increased. "So, in all honesty, (a hike) would be a year premature," says a senior official at an electrical machinery firm.
Rising material costs, owing to a weaker yen, are also burdening companies that have been unable to tack them onto sales prices.
But businesses also understand they cannot avoid pay raises for long. The consumer price index for fiscal 2014, including the impact of the consumption tax increase, is expected to rise 3.3% on the year, according to Bank of Japan forecasts. Without wage hikes, the firms themselves may end up suffering if the economy slows and the prospect of escaping deflation dims.
Earlier this month, the Abe government said it would consider abolishing a reconstruction surtax imposed on companies a year ahead of schedule. Pressure is thus expected to mount on firms to do their part by raising wages.
According to data from the Japanese Trade Union Confederation, the 2008 spring wage negotiations, prior to the financial crisis, yielded monthly pay increases, including base wages, at 28% of businesses. But the 2013 negotiations saw only 10.7% offer such hikes. Instead, "it's easier to share earnings growth windfalls with workers through bonuses, which can be lowered again depending on business conditions," says a senior executive at a food company, echoing what seems to be the prevailing view among business chiefs.
(The Nikkei, Oct. 18 morning edition)