TOKYO - Three-fifths of Japanese firms plan to keep overall compensation flat or even cut it in the coming business year, a Reuters poll found, in a further blow to the government’s attempts to boost incomes and stronger economic growth.
Companies who do increase pay are feeling the pressure to attract young and talented workers amid acute labor shortages due to the fast-ageing population, but even most of them plan increases of 3% or less, the Reuters Corporate Survey showed. The survey results underscore the challenge Prime Minister Shinzo Abe faces in generating a self-sustaining growth cycle needed to put a decisive end to deflation and boost inflation toward the Bank of Japan’s elusive 2% target.
“Regardless of profits, hiring will be negatively affected if we don’t raise wages,” a manager at a food-processing company wrote in the survey. A manager at an electric-machinery maker said many firms were adopting the labor reforms more in form than in substance, “so this won’t lead to a breakthrough in labor productivity.”In the survey, companies were evenly split on the pros and cons of measures aimed at loosening Japan’s inflexible work practices and notoriously long hours.
Years of deflation and fitful growth punctuated by recessions ended the expectations of pay raises as unions focused on preserving jobs. “It’s a bad law that will sap the competitiveness of Japanese businesses and vitality of society, isn’t it?” a manager at an industrial rubber maker wrote.
Tax increases restrain growth?!?!? Who would have thought?!?
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