Asia Economy
Japan’s major electronics makers agree monthly pay rise of €14 / ¥2,000
By Michael Hennigan, Finfacts founder and editor
Mar 11, 2014 - 9:00 AM

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Shinzo Abe, Japan's prime minister, at a press conference in Tokyo, Monday March 10, 2014, in advance of today's third anniversary of the devastating earthquake and tsunami when almost 19,000 people lost their lives.

Japan’s six major electronics makers, including Hitachi Ltd. and Panasonic, have agreed to raise their wage levels by ¥2,000 (€14) per month, the highest hike on record, according to the Kyodo news agency on Monday.

The move is likely to affect other industries as well, before the start of the new fiscal year on April 1st.

Kyodo said NEC  and Fujitsu Ltd. were originally reluctant to accept the agreed amount amount and wanted to limit the pay hike to ¥1,500, but they decided to follow other the companies.

The companies, which include Toshiba  and Mitsubishi Electric, will announce their final decisions Wednesday.

The trade unions at the companies originally made a unified demand to raise basic pay scales by ¥4,000 and said they would strike if the managements do not hike pay by at least ¥2,000.

Companies responded to calls by the government to raise wages to pull Japan out of deflation and soften the impact of the 3% consumption tax hike to take effect on April 1st.

The workers’ union at Toyota has requested an increase in monthly pay of 1.15% or about ¥4,000, while unions at Nissan Motor Co. and Honda Motor Co. have called for a base pay increase of ¥3,500 yen, a 0.96% increase.

Bloomberg reported this month that Japan’s salaries increased for the first time in almost two years in January as companies boosted pay for part-timers, aiding Prime Minister Shinzo Abe’s effort to end 15 years of deflation.

Base pay excluding bonuses and overtime rose 0.1% from a year earlier, the first gain in 22 months, the labor ministry said in Tokyo. Overall pay fell 0.2%, the first drop in three months.

Base wages for full-time workers, who comprise almost 71% of Japan’s working population, were unchanged, while those of part-time workers climbed 1.1%.

Consumer prices

Japan’s consumer prices rose just 0.4% in 2013 but excluding energy and food prices, the index fell 0.2% compared with 2012.

The Bank of Japan’s target is a 2% inflation rate by next year and since early last year it has been aggressively pumping money into the economy.

Government data on Monday showed that the overall economy grew just 0.7% on an annualised basis in the final three months of 2013, a downward revision from the initially projected 1% growth rate. Business investment grew by an annualised 3% in the fourth quarter, compared with a preliminary reading of a 5.3% increase. Consumer spending was up an annualised 1.6%.

While the world's number-three economy grew 0.2% in the quarter to December, growth was 1.5% through 2013.

The current account, which is based on net receipts from trade and investment with the rest of the world, posted an overall deficit of ¥1.59tn ($15.4bn) for January.

Without a rise in wages to promote consumer spending, the 'Abenomics' policy of the prime minister to slay deflation will not succeed.

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