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Economy

Japan wage hikes undershoot 2% for first time in 7 years

Coronavirus tops labor shortage as worry for management, Nikkei survey finds

An automotive factor in Fukushima Prefecture: The coronavirus pandemic adds to the headwinds to Japanese wage growth. (Photo by Akira Kodaka)

TOKYO -- Japanese companies will increase worker pay by an average of 1.98% this year, down 0.32 percentage point from last year and below the 2% mark for the first time in seven years, Nikkei research finds.

In this year's spring wage negotiations, big corporations responded to union demands on March 11.

Since then, the impact of the coronavirus pandemic on earnings has become clearer, undercutting momentum for higher pay in an economy that was already slowing.

"I am concerned that the novel coronavirus and other factors will affect the outcome for small and midsize businesses that have yet to reach an agreement," said Koichi Asanuma, general secretary of the Japan Council of Metalworkers' Unions.

Asked what business conditions they are especially taking into account in this year's wage talks, 58.4% of the respondents said the novel coronavirus, 35.1% pointed to a personnel shortage and 31.6% mentioned a worsening of trade tensions.

"The situation has changed completely from wage hikes to protecting jobs," said Hisashi Yamada, vice chairman of the Japan Research Institute.

Pushing for higher wages has been a key part of Prime Minister Shinzo Abe's effort to reinvigorate economic growth. Last December, Abe urged the nation's top corporate lobby, the Japan Business Federation, or Keidanren, to raise pay for a seventh straight year.

But he stopped short of offering a numerical target for a second year in a row. The last time was the 3% increase he proposed for the 2018 wage negotiation season.

The 1.98% wage hike figure is based on a preliminary compiling of a corporate survey on wages conducted by Nikkei Inc. from March 13 to March 31.

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