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Only 17% of Japan’s biggest firms plan to raise wages

Kyodo

Only 17 percent of major companies will raise wages in the business year that starts April 1, even though 71 percent expect the economy to expand in 2014, according to a Kyodo News survey.

Of the 104 companies polled, 18 said they will authorize wage hikes.

The poll found that many companies remain cautious about pay raises despite the urging of the administration of Prime Minister Shinzo Abe, who wants the economy to keep moving forward after the consumption tax goes up in April.

The Japanese Trade Union Confederation (Rengo), the nation’s biggest umbrella body for labor unions, has declared that for the first time in five years it will demand a basic pay hike during the annual labor-management wage talks in spring.

Among the responding companies, 17 said their pay will remain flat, while one said it will cut wages. But many pointed to the possibility of raising wages in tandem with improved earnings.

Asked whether the government should follow through on its plan to raise the sales tax again in October 2015 expressed support, saying the increase needs to be introduced even if the economy doesn’t improve. Abe is to decide on the additional tax hike at the end of 2014.

Meanwhile, 25 companies said the tax should go up if the economy continues to improve, but it should stay at 8 percent if the economy treads water or deteriorates.

Some companies, including major housing equipment maker Lixil Group Corp., called for stimulus measures such as increased public spending to support the economy if the second increase in the consumption tax is implemented.

On the current state of the economy, 101 companies said it is on an “expanding trend.” A cautious tone remains, however, over the impact of the consumption tax rise, with 40 companies expressing concern about the possibility of declining sales due to weaker personal spending.

Ninety companies in the survey expressed support for the tax hike.

On the dollar-yen exchange rate, many companies favored the dollar trading between ¥95 and ¥105, but some voiced concern that the yen’s excessive depreciation could lead to a surge in import prices for raw materials and fuel.

“Our profits will be pressured if there are additional hikes in electricity and other charges,” a Toshiba Corp. official said, though the company was not sure of the desirable exchange rate.

The poll was conducted from early to mid-December.