business

Japanese companies shun blanket wage hikes amid coronavirus pain

31 Comments
By Tetsushi Kajimoto

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© Thomson Reuters 2021.

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31 Comments
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They refused to give substantive wage hikes pre-COVID, while they earned record high profits and suffered from a severe labour shortage. Why would they give hikes now?!?

The wage-suppression model is part and parcel of neo-liberal style globalization, which in Japan is a result of the market reforms everyone (except me) was cheering about. Hello?

Meanwhile the BOJ folks are scratching their heads over why inflation stubbornly remains so woefully low. LOL.

19 ( +21 / -2 )

Obviously makes sense. Employee income has always reflected the health of the companies, which are doing terribly this year, lots of them, not all of course. And the employee can hit the road if they don’t like it.

-16 ( +3 / -19 )

Let’s not forget these companies were given huge tax cuts a few years ago under the Abenomics crap and were ‘urged’ to pass them on as salary increases, which they didn’t, of course. Salaries in Japan have been stagnant or decreasing for over twenty years. The companies are getting richer and the employees are getting poorer. This is the reality of Japan in the new millennium.

21 ( +23 / -2 )

Our company made record profits this year due to covid and being in digital entertainment. Will be interested next month to see how that trickles down to us or not.

14 ( +15 / -1 )

It's called capitalism, name of the game is profit for the executive class.

If you don't like it, work to change the system.

Otherwise, it is pointless to complain.

-3 ( +5 / -8 )

I’m just grateful I still have a job, and an employer that lets me come to work everyday despite the so-called “State of Emergency”. I don’t have the cheek to expect a pay rise for many years.

-1 ( +3 / -4 )

Japan's biggest business lobby Keidanren has shrugged off labor demand for blanket pay rises as "unrealistic" for the pandemic-hit companies, while labor groups led by Rengo, an umbrella union confederation, have called for uniform base pay hikes of 2%.

The "hoarding" talked about concerning the public during the coronavirus recession was exactly what companies have been doing as stock prices, earnings and productivity rose and wages remained flat.

Now they have the excuse of a pandemic slowdown. Why not have workers have an actual proportional share in line with earnings so there are not these constant contradictions? Are more examples needed of privatizing profits and socializing losses?

6 ( +7 / -1 )

"Hit earnings hard?" Someone in the prosecutors office should start investing these companies for destruction of the public trust.

6 ( +7 / -1 )

So from reading the artical, the workers who actually interact with customers and make the company money are disconnected from profits, that's not fair!

7 ( +8 / -1 )

Not just Japanese companies, my employer is American and they’ve put a global lock on any salary increases this year without high level approval for special cases.

2 ( +2 / -0 )

Salaries in Japan have been stagnant or decreasing for over twenty years. The companies are getting richer and the employees are getting poorer.

A few companies are getting richer, most don’t .

If salaries do not increase, companies can still adjust the bonus. Some do it.

Traditional Corporate Japanese companies were giving a wage increase nearly every year whatever the employee performance. In a way, this is unfair. In my previous company, I had the same wage of my coworkers and some were performing really badly. Just because we were at the same level.

The old system is now shifting away.

Workers should not expect a yearly increase. They have to be performant first.

-4 ( +2 / -6 )

It's called capitalism, name of the game is profit for the executive class.

If you don't like it, work to change the system.

The problem with this comment is that capitalism allows you to start a private company, earn loads of cash, and pay your employees the same amount you make. It’s called freedom. Capitalism doesn’t require you to change the system. The system is up to you.

-5 ( +2 / -7 )

Strange, my daily living costs are increasing.

5 ( +5 / -0 )

2021 will be bad. I have cut spendings by 90% and so has everyone I have talked too. The strategy for 2021 is stay alive.

3 ( +3 / -0 )

60% of Japan's income is domestic, it looks like 99% of politicians companies believe 40% is 100% and block any wage increase. Poverty for all except them. You can work excessively but can't benifit. Not quite a fair or rational system.

2 ( +3 / -1 )

Nearly three quarters of Japanese firms have no plan to offer blanket base pay hikes at this year's shunto labor talks, with two thirds keeping wages flat.....

Quote from 2001, 2011, 2021.

Same recycled report every time. Hadn't read about a substantive pay increase since 1990.

5 ( +6 / -1 )

Why not have workers have an actual proportional share in line with earnings

Shareholders could choose to run a company that way, if they wanted to.

@Wolfpack has this down:

capitalism allows you to start a private company, earn loads of cash, and pay your employees the same amount you make. It’s called freedom. Capitalism doesn’t require you to change the system. The system is up to you.

The system is up to each of us to have our independent influences on.

And there are people who do exactly this sort of stuff. There is this guy Dan Price who pays his staff $70,000 salaries because of whatever he believes. His actions are part of the free market system, and to the extent that he may be inclined to pay people handsomely, all workers benefit from the shift in the demand and supply curves for labour.

It is a problem for no one that some economic actors would choose to pay high wages.

The key is that there is no coercion in these exchanges. Both sides of the exchange can choose to enter it voluntarily if they estimate that they will benefit from it.

But what Japan has, with these across the board wage negotiations is a more centralized scheme that doesn’t produce good outcomes.

Just look at all the moaning in the comments section here.

Raising wages by 2% for 7 years as noted in the article:

Major firms offered pay hikes of 2% or more each spring for seven straight years through last year as the government pressured businesses to boost pay

The result?

Whinging at moaning at JT.

I’ve got an idea.

How about the shareholders get nothing when times are good, and suffer huge losses when times are bad, and employees get all the profits, when there are any? And we have that all be declared law by government?

Who is with me? Let’s hammer the shareholders!!

Time to double down. “Merit-based”, what is that? But if it means that both employer and employee agree to continue the labour arraignment they have, that’s not on. Let’s have more union and government involvement to screw the employers over.

-3 ( +0 / -3 )

capitalism allows you to start a private company, earn loads of cash, and pay your employees the same amount you make. It’s called freedom. Capitalism doesn’t require you to change the system. The system is up to you.

Free-market capitalism is an extreme. Extremes are never good.

Capitalism is definitely my preferred system. It provides the most opportunity for meritocracy and freedom. But unrestricted capitalism ends up harmful society.

As with all things, balance is healthy. Social democracies provide economic motivation, with a social safety net.

0 ( +2 / -2 )

How about the shareholders get nothing when times are good, and suffer huge losses when times are bad, and employees get all the profits, when there are any? And we have that all be declared law by government?

Except for the exaggeration using absolutes, the opposite has been the case for the last forty years, with rising profits and stagnant wages almost across the board. Hard to exercise your capitalist freedom when this phenomenon is so prevalent.

-1 ( +0 / -1 )

capitalism at its best.

dont need to say more.

2 ( +3 / -1 )

Capitalism is definitely my preferred system. It provides the most opportunity for meritocracy and freedom. But unrestricted capitalism ends up harmful society.

As with all things, balance is healthy. Social democracies provide economic motivation, with a social safety net.

Social democracy is not capitalism as it is known as it is known in the US.

It is a system used in countries such as Switzerland, Holland, and Sweden, where people pay high taxes, and the government then allocates these tax monies to social programs.

In other words, it is highly influenced by socialism, with elements of free market principles, but it is not capitalism.

MatejToday  05:44 pm JST

capitalism at its best.

dont need to say more.

Yes.

1 ( +1 / -0 )

Social democracy is not capitalism as it is known as it is known in the US.

Exactly. It's why you get massive income disparity in unbridled capitalist economies like in USA and China, while countries with social democracies have a higher standard of living, and happier people living there.

Unbridled democracy is as much a failure as pure socialism/communism. They end up with the same income and power disparities as each other.

2 ( +2 / -0 )

The simple way to force companies to give wage hikes is to apply negative interest rates to corporate bank accounts-simple!

0 ( +1 / -1 )

unrestricted capitalism ends up harmful society.

“Unrestricted”, in what sense?

Free markets require some things, such as property rights to work.

So few would argue for “unrestricted”.

What is extreme about people in a free market voluntarily cooperating with each other without coercion to achieve mutual benefits?

There is nothing extreme about this, except the decentralization of power from those who would use the power to coerce others to do things that they otherwise would not.

0 ( +0 / -0 )

Except for the exaggeration using absolutes, the opposite has been the case for the last forty years, with rising profits and stagnant wages almost across the board. Hard to exercise your capitalist freedom when this phenomenon is so prevalent.

Anyone who produces things of value that other people will benefit from does fine in a capitalist system.

And the last forty years have produced massive benefits and advances for billions, to the extent that we have capitalist systems at all.

As you have pointed out there is not much capitalist about governments bailing out those who manage to have government do their bidding. There is nothing free market about Peter demanding the government rob Paul and have the money paid to Peter or even Sam. Free markets don’t have government coercing us to do such things or face prison.

To the extent wages are stagnant and there is a problem (dubious claim itself), it is not due to people mutually agreeing to cooperate with one another in a free market.

0 ( +0 / -0 )

capitalism at its best.

This is not capitalism.

-3 ( +0 / -3 )

There is nothing free market about Peter demanding the government rob Paul and have the money paid to Peter or even Sam. Free markets don’t have government coercing us to do such things or face prison.

The friction-less, free market is as much an unrealistic utopia as Karl Marx' communist paradise.

Even Adam Smith, the prophet of free markets, cautioned against the growth of the rentier and financialization.

So labor is devalued and markets become rigged by the vast capital accumulations influencing politics.

That is what we have now, a crony capitalist rentier economy and imagining ideal utopias is not really useful at this point.

1 ( +1 / -0 )

Rather, that people can influence politics and that it would matter to us is precisely why I believe we need to have less government in our lives and retain more freedom for ourselves.

Crony capitalism wouldn’t be much good if government were restrained to a more suitable scope and it was us who had more power.

0 ( +0 / -0 )

Crony capitalism wouldn’t be much good if government were restrained to a more suitable scope and it was us who had more power.

And how do you think that could happen? If you're not actively involved to bring about change it's just a pipe dream. You're also assuming that once other people ('us') got more power, they would themselves be immune to corruption and make well-informed decisions.

Countries like Switzerland, Holland, etc. have a much higher quality of life for their citizens precisely because the government makes it a point to ensure good education, healthcare etc. for everyone.

0 ( +1 / -1 )

You're also assuming that once other people ('us') got more power, they would themselves be immune to corruption 

You’ve missed the point completely.

The system I prefer decentralizes power, and leaves people in charge of their own lives.

It is the concentration of power in central governments that leads to corruption.

If people of Holland and Switzerland are happy with their situation that’s great. But people in many countries are whining and moaning about their governments and rightly so. So these government systems are obviously fallible, since they only work if the right people are in power, which is often not the case.

We need to put shackles on government rather than let government out shackles on us.

0 ( +0 / -0 )

We need to put shackles on government rather than let government out shackles on us.

'Merrikuns are so weird about this.

Those of us who have lived in social democracies laugh at you guys worried about your boogeyman. It must suck to be afraid of your own people.

Actually it does suck. My own government is horrible, and they scare me.

But I'm not stupid enough to think that means government is bad by default. In the other countries I've lived in, it's only done well for me.

1 ( +1 / -0 )

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