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Japan to name, shame firms that refuse to hike pay

AFP-JIJI

The government threatened Thursday to take the unprecedented step of shaming big companies that do not raise wages during the annual spring labor talks, despite calls by the nation’s inflation-stoking prime minister to boost pay.

The surprising threat to disclose companies’ names comes days after Akira Amari, state minister in charge of economic and fiscal policy, raised the stakes in the sensitive pay negotiations with an apparent threat to take action against “uncooperative” firms.

The usually low-key talks were being closely watched to see if cash-rich firms would put more money in workers’ pockets amid worries that wages aren’t keeping pace with the Bank of Japan’s bid to stoke 2 percent inflation, and that the sales tax hike on April 1 will put the brakes on growth.

The government “will react in some way” against firms that are “uncooperative with our policy of creating a virtuous economic cycle,” Amari told reporters on Tuesday, referring to the “Abenomics” strategy of Prime Minister Shinzo Abe.

Tabloid Nikkan Gendai compared Amari’s comments to the aggressive tactics used by the notorious yakuza.

Big companies account for a small fraction of the nation’s workforce.

On Thursday, trade minister Toshimitsu Motegi said his office would publish the outcome of the labor talks known as “shunto,” meaning “spring offensive,” and reveal which members of Japan Inc. heeded the wage-hike call issued by Abe.

“The ministry plans to conduct a survey on the leading 1,800 companies about this year’s shunto talks and disclose the results at latest by May,” Motegi, head of the ministry of economy, trade and industry, told a Diet committee.

Abe’s issued the appeals as part of attempt to kick-start the world’s third-largest economy, which has suffered from years of crippling deflation.

His risky growth blitz, dubbed Abenomics, is aimed at reversing falling prices through aggressive monetary easing, fiscal spending and vows of structural reform. Recent data suggest Tokyo is making headway in stoking that inflation, which would at least bring higher prices.

Consumers are also bracing for a sales tax rise to 8.0 percent next month, up from 5.0 percent. The move, the first stage in doubling the consumption tax, is seen as crucial to shrinking Japan’s massive national debt. But it is also expected to weigh on consumer spending and temporarily slow growth.

Wage rises — a rarity in a country beset by falling prices — are seen as one of the keys to making Abe’s plan to fire up the economy work.

Japan’s auto sector was a key target, with all eyes on Toyota, the world’s biggest automaker, which — along with other exporters — posted big profits on the back of a yen that has been sharply weakened since Abe swept to power in late 2012.

On Wednesday, Toyota said it would raise employees’ pay by an average of ¥2,700 a month and give them a bonus worth on average about 6.8 months of their base wage — a common pay structure in Japan.

Companies including Nissan, Panasonic, Hitachi and Toshiba also announced pay hikes.

The focus will now shift from blue-chip firms to see whether small and mid-sized companies — which employ the vast majority of Japan’s workers — follow the lead on pay.

  • PandaWatch

    Disgusting. Next they’ll be telling companies how much of a product and at what price they should be selling…

    • Stephen Kent

      It does seem fairly unreasonable first glance, but I think it’s important to remember that these big companies benefited from Abe’s aggressive currency weakening moves – which he presumably embarked on having got at least tacit agreement (of the keidanren and other business groups) that they would cooperate with his master plan by raising wages once the value of the yen went down. It could be that the government views the “cash rich” companies who are declining to raise wages as having reneged on an agreement made previously and not fulfilling their part of the deal.

      • PandaWatch

        It’s hard to imagine that all 1800 companies are “cash rich” though. And the companies that probably are, Toyota, Hitachi, Panasonic, have already volunteered to increase base wage.

      • Stephen Kent

        Yes, that’s true. But I would assume that they are going to be selective and only single out companies that appear to be hording cash or prioritizing shareholder profits over increasing wages. There was one big company (I forget which one) that despite reporting high profits on the one hand was internally telling its staff not to get their hopes up for increased wages on the other, and its this kind of duplicitous company that I think would perhaps deserve to be named.

    • Speel

      Not sure if you know the history behind it but Japan’s government has always had some level of control of its economy and when it weakened that the economy crashed. It is the reason they recovered so fast after WW2. Also you need to take into account that if Japan can’t recover its economy now it could crash further due to the yen being weakened. Thus the government is being forced to take some more messures. It isn’t always a good idea to let markets work themselves out, usually governments need to guide things, don’t believe me look at Northern Europe, or Canada

      • lasolitaria

        Really? Is it actually good when governments “guide things”? You should check this:
        http://www.heritage.org/index/ranking

        Now look at the bottom of the chart and tell me how well are those countries doing.

        P.S.: regarding N.E. and Canada, I think you are confusing big welfare with “guiding” the economy.

      • Speel

        Your chart doesn’t really add anything to your argument. All that states is how free the economy is in countries and having Canada in 6th is funny as we are highly regulated. Norway, ranked 32, boasts an un-employment rate of 3.2% Canada’s is 7.3%. Either way I was stating that historically Japan following the end of WW2 controlled much of it’s “capitalist” economy, which led to it’s growth, same with South Korea. So I do argue that there are times when government is need to correct the economy. With Japan the fact that it has had a weak government since the end of the bubble era, which has caused much to stay stagnant. Japan should due whatever it can to reform it’s economy including shaming companies that will not raise wages, then smaller companies will see what happened to larger powerful groups like Toyota and feel as though if they don’t increase wages they could be next.

      • Trey Walters

        That chart doesn’t signify whether those countries’ government is guiding them in the right direction or not so it’s not an indicator that government control(some) over the economy is bad but just shows that the governments policies are wrong. And keep in mind that the government is what gets rid of monopolies and stuff by guiding things with bills like the Sherman Act.