Japanese companies hand out biggest raises in 16 years
TOKYO -- Monthly pay at major Japanese companies will grow an average of more than 7,000 yen ($67.90) for the first time since 1998, bolstered by base pay hikes in particularly prosperous industries.
The average of 2.39%, or 7,697 yen, trounced last year's 1.91% uptick and broke the 2% mark for the first time in 15 years. These figures include both increases in base monthly pay and automatic seniority-based raises.
The tally by the Japan Business Federation, the country's largest business lobby, also known as Keidanren, covers companies on the first section of the Tokyo Stock Exchange with 500 or more employees. Forty-one companies responded to the preliminary survey.
The manufacturing sector reported an average wage hike of 7,900 yen, or 2.5%. Generous raises in the metalworking industry and the automotive sector, at 3.33% and 2.78%, respectively, pushed up the overall figures.
The food and rubber industries were hit by rising material costs due to the soft yen. Their average pay increases languished in the 1% range, even smaller than last year's hikes.
Wages in the nonmanufacturing sector are set to rise by an average of 2.18%, or 7,295 yen.
Many large companies such as Toyota Motor and Hitachi raised base monthly pay for the first time in six years. Base pay has been nearly flat since 2002, but it is expected to increase by 0.4% this year.
If all companies raised base pay by 0.4%, labor income would jump 1 trillion yen, meaning the corporate sector would spend the entire 800 billion yen in savings it reaped from the elimination of a special corporate tax for quake reconstruction. The government did away with the special charge a year ahead of schedule to encourage pay hikes.
It is unclear, however, whether the trend will continue into next spring's negotiations. With the government forecasting 3.2% inflation for this fiscal year, this round of pay raises alone will not compensate for this month's sales tax hike.