Japan’s Businesses Respond to Abe’s Push for Higher Wages
TOKYO — Prime Minister Shinzo Abe of Japan has been putting unusually strong pressure on his country’s businesses to raise workers’ pay, a crucial but still missing piece of his economic growth plans.
There have been repeated public appeals and a series of arm-twisting meetings with executives and union leaders — reminiscent, some analysts say, of a bygone era when Japanese governments guided the economy with a heavy hand.
On Wednesday, Mr. Abe’s aggressive intervention produced the most substantial results so far, as some of Japan’s most prominent companies announced their biggest pay increases in years. They include Toyota and other giants from the carmaking industry, as well as electronics makers like Panasonic and Hitachi.
“With the usual negotiations between business and labor, executives get stuck in a deflationary mind-set,” Mr. Abe said in Parliament, explaining the government’s decision to become closely involved. “I am counting on this progress to continue.”
Photo
A business district in Tokyo. The pay raises at large corporations amount to about $25 to $40 a month and apply only to a privileged minority of the work force. Credit Yuya Shino/Reuters
Wages are vital to Mr. Abe’s hopes of reinvigorating Japan’s economy. Household incomes remain roughly where they were 20 years ago. A tentative rise in wages last year was wiped out by increases in inflation and taxes, leaving the average Japanese worse off, and helping to drive the country into recession.
The country is only just recovering from that unexpected downturn. And a pickup in consumer prices — trumpeted by the government as a sign of renewed economic vigor — has stalled. Without greater increases in pay, Mr. Abe and his advisers fear that an already fraying campaign to stimulate growth, known as Abenomics, could disintegrate completely.
But some question whether the size and scope of the promised increases will be enough to create a virtuous cycle of consumer spending and economic expansion. They amount to a modest $25 to $40 a month and apply only to a privileged minority of the work force: full-time workers at the largest corporations.
Still, both business and labor groups expressed satisfaction with the outcome, saying they hoped that the pay increases would provide the economy some much-needed momentum.
“The government, our company and the union all want to contribute to putting the economy on a positive growth cycle,” Tatsuro Ueda, a managing officer at Toyota, told reporters at a news conference.
Yasunobu Aihara, chairman of the Confederation of Japan Autoworkers’ Unions, said, “We achieved a bigger increase than last year, so this is an important second step.”
The agreements came at the climax of annual talks between companies and unions that are known here as shunto, or spring battle. The custom — part seasonal ritual, part hard-bitten negotiation — has been around since the 1950s, but governments rarely play such a hands-on role.
Mr. Abe has been so involved in this year’s process that observers have labeled it “kansei shunto,” or shunto orchestrated by the government. Nobuo Ikeda, a prominent blogger, has called Mr. Abe’s approach “state socialism.” And some business leaders complain privately that the intervention infringes on their freedom and could endanger their long-term competitiveness by raising the cost of labor.
In addition to using his bully pulpit as prime minister to encourage raises, Mr. Abe has dangled the prospect of tax cuts for businesses, linking potential breaks explicitly to cooperation on pay.
“If companies raise wages solidly, and invest in facilities, the Japanese people will gladly accept more tax cuts,” he told a gathering of business leaders in January.
http://www.nytimes.com/2015/03/19/b...es-respond-to-abes-push-for-higher-wages.html
TOKYO — Prime Minister Shinzo Abe of Japan has been putting unusually strong pressure on his country’s businesses to raise workers’ pay, a crucial but still missing piece of his economic growth plans.
There have been repeated public appeals and a series of arm-twisting meetings with executives and union leaders — reminiscent, some analysts say, of a bygone era when Japanese governments guided the economy with a heavy hand.
On Wednesday, Mr. Abe’s aggressive intervention produced the most substantial results so far, as some of Japan’s most prominent companies announced their biggest pay increases in years. They include Toyota and other giants from the carmaking industry, as well as electronics makers like Panasonic and Hitachi.
“With the usual negotiations between business and labor, executives get stuck in a deflationary mind-set,” Mr. Abe said in Parliament, explaining the government’s decision to become closely involved. “I am counting on this progress to continue.”
Photo
A business district in Tokyo. The pay raises at large corporations amount to about $25 to $40 a month and apply only to a privileged minority of the work force. Credit Yuya Shino/Reuters
Wages are vital to Mr. Abe’s hopes of reinvigorating Japan’s economy. Household incomes remain roughly where they were 20 years ago. A tentative rise in wages last year was wiped out by increases in inflation and taxes, leaving the average Japanese worse off, and helping to drive the country into recession.
The country is only just recovering from that unexpected downturn. And a pickup in consumer prices — trumpeted by the government as a sign of renewed economic vigor — has stalled. Without greater increases in pay, Mr. Abe and his advisers fear that an already fraying campaign to stimulate growth, known as Abenomics, could disintegrate completely.
But some question whether the size and scope of the promised increases will be enough to create a virtuous cycle of consumer spending and economic expansion. They amount to a modest $25 to $40 a month and apply only to a privileged minority of the work force: full-time workers at the largest corporations.
Still, both business and labor groups expressed satisfaction with the outcome, saying they hoped that the pay increases would provide the economy some much-needed momentum.
“The government, our company and the union all want to contribute to putting the economy on a positive growth cycle,” Tatsuro Ueda, a managing officer at Toyota, told reporters at a news conference.
Yasunobu Aihara, chairman of the Confederation of Japan Autoworkers’ Unions, said, “We achieved a bigger increase than last year, so this is an important second step.”
The agreements came at the climax of annual talks between companies and unions that are known here as shunto, or spring battle. The custom — part seasonal ritual, part hard-bitten negotiation — has been around since the 1950s, but governments rarely play such a hands-on role.
Mr. Abe has been so involved in this year’s process that observers have labeled it “kansei shunto,” or shunto orchestrated by the government. Nobuo Ikeda, a prominent blogger, has called Mr. Abe’s approach “state socialism.” And some business leaders complain privately that the intervention infringes on their freedom and could endanger their long-term competitiveness by raising the cost of labor.
In addition to using his bully pulpit as prime minister to encourage raises, Mr. Abe has dangled the prospect of tax cuts for businesses, linking potential breaks explicitly to cooperation on pay.
“If companies raise wages solidly, and invest in facilities, the Japanese people will gladly accept more tax cuts,” he told a gathering of business leaders in January.
http://www.nytimes.com/2015/03/19/b...es-respond-to-abes-push-for-higher-wages.html
