Japan's Prime Minister Shinzo Abe seeks a 3% wage hike to stymie deflation. The call goes unheeded as Over Half of Japanese Firms Plan No Base Pay Rise This Year.

In a monthly Reuters Corporate Survey, just less than half [of Japanese companies] said they would raise pay and most in this group said the increase would be similar to last year’s level of about 2 percent.

In the past four years, major companies agreed to raise wages about 2 percent at annual wage negotiations with labor unions, a benchmark that sets the tone for talks across the country. The bulk of that - about 1.8 percent - comes automatically under Japan’s seniority-based employment system. Anything beyond that is a hike in “base pay.”

But many firms are wary of raising wages as it commits them to higher fixed personnel costs, so they prefer to pay one-off bonuses instead.

The survey was conducted between Jan 31 and Feb 14 on behalf of Reuters by Nikkei Research. Of some 240 companies that responded, 52 percent said they would not raise base pay. “It would leave a burden when the business environment turns for the worse,” wrote a manager at a transport equipment maker in the survey.

The remaining 48 percent said they intended to raise base pay, but 76 percent of this group said the rise would be the same as last year. About 14 percent saw pay rises exceeding last year, while 10 percent said they would undershoot last year’s increase.

In Japan, base salary accounts for the bulk of monthly wages. Rises in base pay had been virtually frozen since the early 2000s amid persistent deflation.

Basic Wage Hike Math

If 50% raise by 2% and 50% by none, the average is 1%. However, we do not know how those hikes are distributed.


Is it the large companies or the small ones offering 0% hikes?

Here's the deal: If Japan hikes wages, the cost of its products will have to rise. If wages in the US rise and Japan's don't Japanese cars and other goods will be more competitive.

But that's looking at things in a vacuum. The US dollar has been falling. Japanese products already cost more.

I have a musical tribute

Nothin' From Nothin'

Such is the nature of competitive currency debasement.

For the situation in the US, please see How the Fed's Inflation Policies Crucify Workers in Pictures.

Mike "Mish" Shedlock

Real Wages Decline Year-Over-Year

Wages are not keeping up with consumer price inflation. The average worker is worse off than a year ago.

Bank of Japan Owns Over Half of Japanese ETFs; Why Stop There?

In addition to being well on the way of cornering the Japanese bond market, the bank of Japan is even further on its way of cornering the Japanese stock market.

Imaginary Wage-Inflation Conundrum

Economists are puzzled over the wage growth conundrum. Wages were supposed to rise significantly. They didn't. Why?

Excellent Reflections on Minimum Wage Hikes Backfiring Overseas

Here's an excellent set of Tweets on minimum wages from "Trinh" @Trinhnomics in Hong Kong, on actions taken by S Korea.

Pay Hikes in 2020: What Do You Expect?

Every month the New York Fed does a survey of household expectations. Let's take a look at the findings.

Acceleration in Wage Growth is a Statistical Mirage

The hype over wage growth had been nonstop since Friday's jobs report. No one bothered to look at the details.

Investigating the Mystery of Weak Wage Growth

The Wall Street Journal proposes "Reluctance to Switch Jobs" explains wages. But the Atlanta Fed Macroblog says, nope.

Japanese Economy Shrinks, Yen Weakens, Nikkei Soars Over 1,000 Points

For the 4th time in seven quarters the Japanese economy shrank. It appears Japan may be headed for another recession.

Japanese Elderly Commit Crimes Hoping to Get into Prison! Retail Spending Plunges

Despite overwhelming fears of deflation in Japan by economists, by the Bank of Japan, and by prime minister Shinz┼Ź Abe, all of the preceding forgot to get the opinion of consumers.