TOKYO- From inflation allowances to the reskilling of workers, firms in Japan are stepping up efforts to help employees fight rising prices and a labor crunch, even though some cannot afford pay hikes that do more than offset cost-push inflation.
As annual “shunto” labor talks get into full swing, momentum from both labor and management is growing for firms to offer such hikes to cushion, even if not beat, consumer inflation, which hit a 41-year high of 4 percent in December.
At the spring session of the labor talks, set to wrap in mid-March, major firms, such as Toyota Motor Corp, negotiate with in-house unions to set wages for the coming fiscal year from April.
Labor shortages and rising consumer inflation, which is double the central bank’s target of 2 percent, are spurring cautious firms, with a 500-trillion-yen ($3.85 trillion) hoard of internal reserves, to hike wages.
About a quarter of Japanese firms have offered inflation allowances or plan to do so, said corporate credit research firm Teikoku Databank. Such allowances range from 6,500 yen ($50) for monthly payments to 54,000 yen in lump sums, on average.
“I received the money just when we had our second baby,” said Shinichiro Mori, who received a one-off allowance of 150,000 yen last summer from groupware developer Cybozu Inc, one of about 800 employees to do so.
“I appreciated the money,” Mori, 41, told Reuters. “We spent it on baby goods, utility bills and other living expenses, as we stayed home all day taking care of our baby.”
News that Fast Retailing Co, operator of the Uniqlo clothing chain, will revise its pay system for employees, with raises as much as 40 percent, provides another example.
The private sector expects the drive to help boost productivity, meshing with Prime Minister Fumio Kishida’s “new capitalism” initiative on wealth distribution that put a top priority on wage hikes.
Such demands by Japanese policymakers come against the backdrop of 15 years of grinding deflation that saw firms shelve hikes in base salary from the early 2000s to the early 2010s, when rounds of stimulus spending failed to spark economic growth, but piled up public debt instead.
OECD data shows Japanese workers’ wages have grown about 5 percent over a period of 30 years from 1990, during which US pay rose 1.5 times and pay for South Koreans doubled. – Reuters
