• Kyodo

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Japanese firms need to raise salaries in order to put the economy on a firmer footing, the head of the nation’s top business lobby said on Monday before annual wage talks shift into full swing in February.

“I would like to ask companies with robust earnings to think positively about increasing wages, including bonuses and extra pay,” Sadayuki Sakakibara, chairman of the Japan Business Federation, also known as Keidanren, told a forum in Tokyo.

“I believe the business community should try to take a further step,” he said, echoing repeated calls by Prime Minister Shinzo Abe for wage hikes to support his “Abenomics” policies for revitalizing the economy, which fell back into recession last year following a consumption tax hike in April.

Nobuaki Koga, president of the Japanese Trade Union Confederation (Rengo), was also due to deliver a speech at the forum later in the day.

Observers are keen to see how many major companies will accept pay-scale hikes during the annual negotiations as a way to reward employees for brisk business results.

For the second straight year, Keidanren said last week it will allow its member companies to raise pay scales as “one of the options.”

Last year, more companies raised pay to a degree unseen in previous years, as the central government aimed to boost the Japanese economy out of nearly two decades of deflation.

Stronger economic performance across a broader range of industries has raised hopes for widespread wage hikes again this year. However, many companies still seem to favor increasing bonuses or other lump-sum payments, which pushes up fixed business costs.

It’s also uncertain whether smaller firms will be able to afford to hike wages when they have been suffering from surging raw material and other import costs due to the sharp depreciation of the yen against other currencies.

Keidanren will likely reject a request by Rengo for a minimum 2 percent pay-scale rise across all industries.

Sakakibara and Koga are scheduled to meet later this week.

Major carmakers and some electronics firms may be inclined to raise salaries on the back of record profits due partly to the weaker yen, which has boosted the value of their overseas sales.

The labor unions of Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. are all set to demand a pay-scale hike of ¥6,000 ($51) per month in upcoming talks that will last through mid-March.

The figure represents an increase over last year’s requests of ¥4,000 for Toyota and ¥3,500 for Nissan and Honda. Those requests led to a rise of ¥2,700 at Toyota, ¥3,500 at Nissan and ¥2,200 at Honda.

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