Some big names, like Toyota Motor Corp <7203.T>, are expected to
raise base pay, but the bulk of companies in the Reuters Corporate
Survey say they will at most raise bonuses, which can easily be
reversed if the economic recovery lapses.
While bonuses account for an average 17 percent of a Japanese
worker's total compensation, the survey points to diminished
purchasing power for many workers.
Only 11 percent of firms said they plan to lift overall remuneration — bonuses plus any rise in base pay — by enough to cover a 3
percentage point rise in the national sales tax that takes effect
Abenomics has spurred economic growth and sharp climbs in corporate
profits with bold monetary easing and government spending, but
economists argue that base pay hikes, along with more capital
spending, are key to transitioning to a self-sustaining recovery.
Since taking office in December 2012, Abe has publicly pressured big
business to raise wages. Workers at major companies like Toyota,
Hitachi Ltd <6501.T>, Nippon Steel & Sumitomo Metal Corp <5401.T>
are demanding higher base pay for the year from April.
Toyota is likely to raise base pay for the first time in six years,
according to suppliers for the carmaker. Toyota officials told
reporters on Wednesday that nothing was decided as negotiations are
But the survey, conducted Feb 3-17 for Reuters by Nikkei Research,
indicates such largesse remains the exception as executives across a
broad range of industries said they remain leery of raising fixed
costs amid an uncertain economic outlook.
"If we went ahead with a fixed increase in wages, we would not be
able to respond to fluctuations in business conditions," wrote one
executive at a wholesaler in a typical response.
Of the 241 firms that replied to a question on their stance on
salary negotiations, 66 percent said they would lift bonuses but not
underlying compensation, while 16 percent plan no increases at all.
That represents a slightly more encouraging stance than in September
when 60 percent described their basic stance as to lift bonuses but
not base wages, while 24 percent were not considering any pay
Shintaro Okuno, a partner at consultants Bain & Co Japan, who
reviewed the results of the survey, said Japanese firms, having
developed a lean cost structure to cope when the yen was high, were
loathe to give that flexibility up.
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"One of the few management (tactics) to counter instability of the
future is to keep your fixed costs as lean as possible," he said.
The results come just as worries mount that the Abenomics boost
is fading. Japan's economy, after leading the Group of Seven powers
in the first half of 2013, skidded to annual growth of 1 percent in
the second half, hurt by weakness in exports, private consumption
and capital spending.
Sentiment at Japanese manufacturers slipped in February for the
first time in five months and is seen sliding further, the Reuters
Tankan survey, taken alongside the corporate survey, showed.
Concerns mentioned by executives in the comment sections of the
corporate survey, included the impact of the sales tax hike on
consumer sentiment, increased competition as well as rises in energy
The poll also showed deep-seated skepticism that the Bank of Japan
can meet its goal of lifting the world's third-biggest economy out
of 15 years of deflation by next year.
Given the headwinds, just 15 percent of respondents think prices
will increase by 2 percent or more in a year from now, after
stripping out the effect of the sales tax hike. Including the tax
increase, however, 69 percent expect inflation to meet or beat the
The Reuters Corporate Survey polls upper management at 400 companies
each capitalized at more than 1 billion yen. The firms, split evenly
between manufacturers and non-manufacturers, respond anonymously.
(Additional reporting by Tetsushi
Kajimoto; editing by William Mallard and Edwina Gibbs)
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