The Bank of Japan gave the first pay raise in nine years to its Policy Board and other executives, backing Gov. Haruhiko Kuroda’s efforts to reflate the world’s third-biggest economy.
Kuroda’s salary will rise to ¥34.7 million in the year that started in April, the central bank said in a statement Tuesday. Pay of executives and the eight other board members will also increase by 1.3 percent.
Prime Minister Shinzo Abe has called on companies to raise wages to support an economic recovery. Average pay has lagged behind prices, especially after the consumption tax hike in April helped boost inflation to more than 3 percent.
“The pay increase at the BOJ is another good sign that a virtuous cycle of ‘Abenomics’ is spreading in Japan,” said Minoru Nogimori, an economist at Nomura Securities Co.
“Wage increases in the government and at the BOJ will promote raises at private companies,” and is a sign the country is escaping deflation, Nogimori said.
Even with the increases, the board members’ and executives’ pay will rise less than inflation. Consumer prices are forecast to climb 3.2 percent this fiscal year, according to a survey this month by Bloomberg. Adjusted for inflation, average wages in September declined for a 15th straight month.
The pay of Kuroda, the board’s members and some of the bank’s executives was cut in fiscal 2012 and 2013 as part of the government’s efforts to defray reconstruction costs after the 2011 earthquake and tsunami that devastated the Tohoku region. The pay changes were based on a comparison with last fiscal year’s salary before the temporary reduction. There was no deduction this year.
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