The pay raises offered by leading Japanese firms this week are an encouraging sign that some companies, at least, are translating the improved corporate earnings posted the past year into higher wages for workers — thanks partly to unusual pressures put on management by the government.
But it remains unclear how the wage hikes at top-notch firms will spread to small and medium-size firms — or benefit the nation's growing ranks of irregular workers — and help keep consumer spending from stalling after the consumption tax rate increases next month by three percentage points.
In the annual wage negotiations with their unions, trendsetting major automakers and electronics firms — many of which saw their earnings climb sharp due partly to the yen's 20 percent decline in value against the dollar since Prime Minister Shinzo Abe took office — have agreed to the highest pay raises in years, including hikes in monthly pay scales that they had been reluctant to offer because such raises will increase fixed manpower costs amid tightening international competition.