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Workers at Japan's top companies likely to get meagre 2017 pay hikes
March 14, 2017 / 10:03 PM / 8 months ago

Workers at Japan's top companies likely to get meagre 2017 pay hikes

    * Tiny rises would be a setback for Prime Minister Abe
    * Unions have made same demands as one year ago
    * Big firms expected to give less than half of union demands
    * Nearly two-third of firms to give no hike - Reuters poll

    By Tetsushi Kajimoto
    TOKYO, March 15 (Reuters) - Workers at Japan's top companies
are likely to get a base pay hike of around just 0.3 percent,
the smallest raise in four years - a setback for Prime Minister
Shinzo Abe's campaign to spur the long-sluggish economy.
    The annual "shunto" spring wage increases to be announced on
Wednesday, which take effect in the coming fiscal year from
April, are seen as a barometer of Japanese corporate confidence.
    Despite sitting on piles of cash, companies are reluctant to
raise wages as they're anxious about the economic outlook,
currency swings and the chance U.S. President Donald Trump's
trade policies will hurt Japan's exports.
    A Reuters poll in January showed that nearly two-thirds of
companies do not plan to raise their workers' wages this year.
    Even where hikes are certain, the amounts can be tiny.
    Toyota Motor Corp's          base pay hike, traditionally a
benchmark other companies use to gauge their increases, will
likely come to just 1,300 yen, or about $11, a month. That's
less than half the union's demand and well below the 4,000 yen
hike given in 2015. 
    For a mid-level technician at Toyota earning 360,000 yen a
month, that's a 0.36 percent increase.
    Total wage growth will be higher than that: Workers will see
 roughly 2 percent more in their paychecks because their salary
goes up automatically every year under Japan's seniority-based
employment system.
    Still, such an increase is below last year's 2.14 percent,
and 2015's 2.38 percent, a 17-year high.
    Major electric machinery makers such as Hitachi         ,
Mitsubishi Electric          and Panasonic Corp          are
expected to reduce their wage hikes for a second year, to 1,000
yen from 1,500 yen.
    From the early 2000s, base pay raises were virtually frozen
for over a decade until Abe swept to power in late 2012 with a
pledge to reboot the moribund economy. He urged companies to
lift wages and they complied, to a degree.
    Abe wants healthy wage hikes to drive a virtuous growth
cycle in which consumer spending and business investment rise,
in turn lifting profits and wages. The central bank also wants
to see higher wages lift prices and enable Japan to break out of
its deflationary rut.
    But the latest meagre gains bode poorly for that scenario.
    "Wage growth is likely to slow this year, which together
with gradual rises in prices will weigh on real incomes," said
Yoshiki Shinke, chief economist at Dai-ichi Life Research
Institute. "That will hamper self-sustaining economic recovery
led by domestic demand."
    This year, unions kept their demands unchanged from last
year. Still, many companies are likely to offer less than half
of what unions want.
    "I have no expectation for 'shunto' because my labour union
is not so strong and they don't really fight for wage
increases," said a 26-year-old worker at an energy company who
gave only his first name, Toshiki.
    "Even if I do get a pay raise, I wouldn't spend it," he
($1 = 114.60 yen)

 (Reporting by Tetsushi Kajimoto, additional reporting by Minami
Funakoshi; Writing by Malcolm Foster and Tetsuhi Kajimoto;
Editing by Richard Borsuk)

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