Japan Inc to raise wages but likely short of PM Abe's 3 pct target

From Reuters - March 13, 2018

TOKYO (Reuters) - Big Japanese companies are set to agree on Wednesday to raise wages for a fifth year but likely stop short of meeting Prime Minister Shinzo Abes 3 percent goal, adding to doubts the central bank will be able to hit its consumer price target.

The results of the shunto spring wage negotiations between corporate management and unions, announced by the big automobile and electronics companies, will set the tone for wage hikes across the nation and could provide hints about future consumer spending.

Abe has been campaigning for a 3 percent gain to spur consumption and banish the deflation that has dogged Japans economy for nearly two decades. Bank of Japan Governor Haruhiko Kuroda has also urged a 3 percent raise to nudge up inflation to the BOJs long elusive 2 percent target.

Wage growth is expected to accelerate given bigger bonuses, and rising pay at small firms and for part timers. Still, it wont reach Abes 3 percent target or be strong enough to clear hurdles for the central bank to raise rates, some analysts say.

The Bank of Japan wont move this year. It will probably wait to see results of next years shunto, said Yoshimasa Maruyama, chief economist at SMBC Nikko Securities.

Even though many Japanese companies are sitting on piles of cash from healthy earnings, they are wary of boosting base salaries because that commits them to higher fixed personnel costs. Instead, they prefer one-off bonuses and other benefits.

Toyota Motor Corp (7203.T), considered a bellwether in the countrys annual wage negotiations, is set to raise base monthly salaries by more than 1,300 yen ($12.18) for the year beginning April, local media reported.

It marked the fifth straight year the automaker lifted workers pay, but the increase is less than the 3,000 yen demanded by its union.


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