31 Oct 2013
Stagnant Japanese wages to put a cap on inflation
FXstreet.com (Barcelona) - The set of economic and fiscal reforms announced by Japanese Prime Minister Shinzo Abe earlier this year are still having no effect to encourage a rise in paycheck to Japanese workers. Today, it was confirmed that Japan’s salaries slid the most since 2010, making the prospects of inflation look harder to be achieved.
According to the Japanese Labor Ministry, regular salaries excluding overtime and bonuses were down 0.3% in September from a year earlier, extending to 16 the month in which wages have been depressed. Total cash earnings stood at 01%.
Bloomberg quotes Norio Miyagawa, a senior economist at Mizuho Securities Research and Consulting Co. in Tokyo, saying: "The key for the success of Abenomics is whether companies will raise wages. Companies still aren’t confident enough that growth will be sustained and will probably hesitate to raise wages, especially base salaries, for the time being.”
The key for wage increases will be how successful the negotiations between companies and trade unions are. Bloomberg quotes Jerry Schiff, IMF mission chief for Japan, saying: "The negotiations will be one clear point at which there is a chance to either show that something new is happening or raise further doubts. It’ll be important to get wages to begin to rise soon.”
The talks are thought to extend well into next year, with reports suggesting that the Japanese Trade Union Confederation, or Rengo, is aiming at a pay rise of 1% by next year. The ability by Japan to raise wages is critical in achieving sustained inflation in the country, thus having an important impact on the expectations of the investing community towards the BoJ monetary policies.
According to the Japanese Labor Ministry, regular salaries excluding overtime and bonuses were down 0.3% in September from a year earlier, extending to 16 the month in which wages have been depressed. Total cash earnings stood at 01%.
Bloomberg quotes Norio Miyagawa, a senior economist at Mizuho Securities Research and Consulting Co. in Tokyo, saying: "The key for the success of Abenomics is whether companies will raise wages. Companies still aren’t confident enough that growth will be sustained and will probably hesitate to raise wages, especially base salaries, for the time being.”
The key for wage increases will be how successful the negotiations between companies and trade unions are. Bloomberg quotes Jerry Schiff, IMF mission chief for Japan, saying: "The negotiations will be one clear point at which there is a chance to either show that something new is happening or raise further doubts. It’ll be important to get wages to begin to rise soon.”
The talks are thought to extend well into next year, with reports suggesting that the Japanese Trade Union Confederation, or Rengo, is aiming at a pay rise of 1% by next year. The ability by Japan to raise wages is critical in achieving sustained inflation in the country, thus having an important impact on the expectations of the investing community towards the BoJ monetary policies.