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☆ Why Japan's 'shunto' wage hikes may not bring cheer to over 80% of its workers
▼ + stars: | 2024-04-03 | by ( Lim Hui Jie | ) www.cnbc.com time to read: +1 min

Akihiko Matsuura, president of UA Zensen, center, raises his fist with members of the union during a rally for the annual wage negotiations in Tokyo, Japan, on Thursday, March 7, 2024. But will the "shunto" hikes really work for its legions of salarymen? However, headline inflation, which has been above the Bank of Japan's 2% target since April 2022, hits the entire population. This means that the generous pay raise negotiated by the unions leave out almost 84% of Japan's workforce. The recent wage negotiations are also likely to benefit mostly workers in large Japanese companies, while employees at small and medium enterprises might have to face rising prices without a commensurate hike to their salaries.

Persons: Akihiko Matsuura, Richard Kaye, Comgest, Japan Organizations: UA, Japanese Trade Union Confederation, Japan International Labour Foundation, Bank of Japan's, CNBC Locations: Tokyo, Japan

The BOJ will now look to utilize its short-term interest rate as its primary policy tool. It will employ an interest rate of 0.1% to current account balances held by financial institutions at the central bank from March 21, while encouraging the uncollateralized overnight call rate (another interest rate used as a policy lever by the bank) to remain at around 0 to 0.1% — effectively raising interest rates from -0.1% previously. It would resort to "nimble responses" in the form of increased Japan government bond purchases and fixed-rate purchases of JGBs, among other things, if there is a rapid rise in long-term interest rates. Japanese investors have looked elsewhere for better returns given years of artificially depressed interest rates in their home market. The Fed is due to announce its own interest rate decision on Wednesday.

Persons: Japan Alexander Spatari, Kazuo Ueda, Rob Carnell, BOJ, Ueda, Michael Brown, —, JGBs, Vishnu Varathan, Hayden Briscoe, Briscoe Organizations: Japan's, Japan Inc, Asia, ING, CNBC, Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, Mizuho Financial Group, Bank of America, Barclays, U.S . Federal, UBS Asset Management Locations: Dotonbori, Japan, Japan's, U.S, Mizuho's, Asia

☆ Bank of Japan hikes rates for the first time in 17 years in a historic shift, abolishes yield curve control
▼ + stars: | 2024-03-19 | by ( Clement Tan | In Clemtan | ) www.cnbc.com time to read: +2 min

Japan's central bank raised interest rates on Tuesday for the first time since 2007, ending the world's last negative rates regime on early signs of robust wage gains this year. The BOJ raised its short-term interest rates to around 0% to 0.1% from -0.1%, according to its statement at the end of its two-day March policy meeting. Japan's negative rates regime had been in place since 2016. The BOJ also announced the abolition of its radical yield curve control policy for 10-year Japanese government bonds, which the central bank has employed to target longer-term interest rates by buying and selling bonds as necessary. The Bank of Japan expects higher salaries to lead to a virtuous spiral with domestic demand fueling inflation.

Persons: BOJ, Kazuo Ueda Organizations: Japan Inc, Bank of Japan Locations: Japan, Japan's

(Photo by Kazuhiro NOGI / AFP) (Photo by KAZUHIRO NOGI/AFP via Getty Images)At Japan's highly anticipated "shunto" spring wage negotiations this year, the world's largest automaker Toyota agreed to the biggest annual pay increase for workers in 25 years. Market speculation reached fever pitch this week as various corporate giants announced robust negotiated salary increments that in some instances exceeded what unions petitioned for. Bank of Japan Governor Kazuo Ueda has repeatedly said the outcome of this year's wage negotiations will influence the central bank's decision on when to exit the world's last negative interest rate policy. Japan's largest trade union grouping, known as Rengo, will announce the first collation of ongoing wage negotiations on Friday. Here's what you need to know about this year's spring wage talks, which takes place annually in March.

Persons: Kazuhiro NOGI, KAZUHIRO NOGI, Kazuo Ueda Organizations: Bank of Japan, The Bank of Japan, Getty, Toyota Locations: Tokyo, AFP

☆ Japan Inc set to offer big wage hikes, paving way for end to negative rates
▼ + stars: | 2024-03-13 | by ( ) www.cnbc.com time to read: +2 min

Some of Japan's biggest companies are expected to formally offer sizeable pay increases at annual talks with unions that wrap up on Wednesday, clearing the way for the central bank to end negative interest rates as early as next week. Some of Japan's biggest companies are expected to formally offer sizeable pay increases at annual talks with unions that wrap up on Wednesday, clearing the way for the central bank to end negative interest rates as early as next week. Economists see substantial wage increases as a prerequisite for the Bank of Japan, or BOJ, to declare that its long-held goals of sustainable wage growth and stable prices are in sight and usher in an end to negative rates in place since 2016. As a result, some analysts expect this year's wage increases at 5% or more, from just under 4% previously. Unions across industries, including automobiles, electronics, metals, heavy machinery and the service sector have all demanded hefty pay hikes.

Organizations: Toyota Motor, Japan's, Bank of Japan, Workers Locations: Toyota, Nagoya, Japan

"Given the fast-changing landscape, I believe those who move fast (with wage hikes) should become competitive." A demand made this year by Rengo, Japan's largest trade union confederation, for pay hikes of "around 5%" resulted in average wage hikes of 3.58% among major companies. Six out of 10 economists in a Reuters poll expect major firms' pay hikes in 2024 to exceed this year's. The key, however, would be whether wage hikes broaden to smaller firms and those in the regional areas. A report by the BOJ's regional branch managers in October warned wage hikes remained uneven among sectors with many firms undecided on next year's pay increments.

Persons: Kim Kyung, Takeshi Niinami, Fumio, Kazuo Ueda, Hisashi Yamada, Rengo, Atsushi Takeda, Kishida, Keita Kondo, Tetsushi Kajimoto, Kentaro Sugiyama, Sam Holmes, Leika Organizations: REUTERS, Rights, Suntory Holdings Ltd, Reuters, Meiji, Life Insurance, Suntory Holdings, Bank, Japan, Hosei University, OECD, UA Zensen, Itochu Economic Research Institute, Thomson Locations: Tokyo, Japan, Ukraine, Saitama

☆ Japan's inflation-adjusted wages slip in September for 18th month
▼ + stars: | 2023-11-07 | by ( ) www.reuters.com time to read: +3 min

REUTERS/Androniki Christodoulou/File Photo Acquire Licensing RightsTOKYO, Nov 7 (Reuters) - Japan's real wages slipped in September for an 18th month, government data showed on Tuesday, with rising prices squeezing consumers' purchasing power, and likely to add to pressure from labour groups for higher wage increases. Financial markets worldwide pay close attention to the wage trends in the world's third-largest economy. Inflation-adjusted real wages, a barometer of consumer purchasing power, dropped in September by 2.4% from a year earlier after a revised 2.8% fall the month before, data from the Ministry of Health, Labour and Welfare showed. Base salary growth in September advanced by 1.4% year-on-year, from a revised 1.2% increase the previous month, the data showed. Overtime pay, a gauge of business activity, went up in September by 0.7% year-on-year, after a revised 0.2% gain in August.

Persons: Androniki, Fumio Kishida's, Satoshi Sugiyama, Robert Birsel Organizations: REUTERS, Rights, Financial, Bank of Japan, Ministry of Health, Labour, Welfare, Rengo, UA, Thomson Locations: Tokyo, Japan, Base

☆ Bank of Japan policymakers are meeting next week. Here's what you need to know
▼ + stars: | 2023-10-27 | by ( Clement Tan | ) www.cnbc.com time to read: +6 min

Policymakers meet eight times a year to decide on the bank's monetary policy position, updating its economic outlook at every other meeting. At these meetings, the BOJ policymakers decides on its monetary policy position, which then dictates how the central bank taps the money market. To absorb funds, the Japanese central bank issues and sells bills. Here's how the Bank of Japan conducts its monetary policy. "The objective of the Bank's monetary policy is achieving price stability, which is its mission as stipulated by law.

Persons: Javier Ghersi, it's, —, Price, Kazuo Ueda Organizations: Getty Images Bank of Japan, Investors, Bank of Japan, Bank of, of, Japan Society of Monetary Locations: Japan, Tokyo, Bank of Japan

☆ BOJ to release quarterly report that may offer clues on wages
▼ + stars: | 2023-10-19 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

TOKYO, Oct 19 (Reuters) - The Bank of Japan will release a regional economic report on Thursday that may offer clues on whether companies across the country will raise wages next year, and help lay the groundwork for phasing out the central bank's massive monetary stimulus. The report, due at 2 p.m. (0500 GMT), will be closely scrutinised by the central bank's nine-member board at its Oct. 30 to 31 policy meeting, which will compile fresh quarterly growth and inflation projections. The report is drawing more attention than usual this time for possible early clues on whether wage hikes will continue next year and broaden out to smaller firms. That would be seen as a key condition for the BOJ to dial back its stimulus, analysts say. The key for policymakers, however, is whether companies keep hiking wages next year, including smaller firms and across regions.

Persons: Kazuo Ueda, Ueda, Rengo, Leika Kihara, Edmund Klamann Organizations: Bank of Japan, NHK, Reuters, Thomson Locations: TOKYO, Japan

☆ What will BOJ's policy normalisation path look like?
▼ + stars: | 2023-09-12 | by ( Leika Kihara | ) www.reuters.com time to read: +4 min

Bank of Japan Governor Kazuo Ueda speaks at a group interview with media in Tokyo, Japan, May 25, 2023. But his hawkish remarks have pushed up the 10-year JGB yield to a near decade-high of 0.715% on Tuesday. It also likely sees 0.8% as a threshold it wants to defend to avoid the 10-year yield from reaching 1%. That could mean the BOJ will retain the yield cap as a precaution when it raises short-term rates, some analysts say. There are no scheduled public appearances of BOJ executives until governor Ueda's regular news conference, to be held after the BOJ's next two-day policy meeting ending on Sept. 22.

Persons: Kazuo Ueda, Kim Kyung, Kazuo Ueda's hawkish, Ueda, Haruhiko Kuroda, Ueda's, Leika Kihara, Tetsushi, Shri Navaratnam Organizations: Japan, REUTERS, Rights, Bank of Japan, Rengo, NEXT, Thomson Locations: Tokyo, Japan

☆ Japan set for largest ever minimum wage hike after panel proposal
▼ + stars: | 2023-07-28 | by ( ) www.reuters.com time to read: +1 min

TOKYO, July 28 (Reuters) - A Japanese government panel recommended on Friday that the national average minimum wage be raised by 41 yen ($0.29) an hour to 1,002 yen, the biggest hike ever in value terms, as Prime Minister Fumio Kishida makes wages a key focus of his policies. The health ministry panel's annual recommendation serves as the nationwide standard for minimum wages. Kishida and the Bank of Japan are hoping that wage hikes can be sustained so that they generate more consumer spending that decisively lifts the world's third-largest economy out of decades of stagnation. Minimum wages are set by the government, while in the annual round of spring wage negotiations, corporate management and labour unions negotiate directly over salaries. Japan's largest labour organisation, Rengo, said this month that major companies had agreed to average pay hikes of 3.58% this year, the highest level in three decades.

Persons: Fumio Kishida, Kishida, I've, Kiyoshi Takenaka, Hugh Lawson Organizations: Bank of Japan, Thomson Locations: TOKYO

Global financial markets have been closely watching Japan's wage data, as Bank of Japan Governor Kazuo Ueda regards pay growth as a key gauge to consider in deliberations about a shift in policy. Regular wages rose 1.8% in May from a year before, labour ministry data showed, the biggest gain since February 1995. The strong base pay growth boosted worker's total cash earnings, or nominal wages, by 2.5% in May, after a revised 0.8% increase logged in April. Still, real wages contracted 1.2% in May, the 14th consecutive month of year-on-year declines, as relentless consumer inflation outstrips nominal pay growth and squeezes households' buying power. On a seasonally adjusted month-on-month basis, household spending was down 1.1%, versus an estimated 0.5% gain to mark a fourth month of decline.

Persons: Kazuo Ueda, Kuroda, Hisashi Yamada, Rengo, Takumi Tsunoda, Shinichi Uchida, Taro Saito, Satoshi Sugiyama, Kantaro, Tetsushi Kajimoto, Sam Holmes Organizations: Global, Bank of Japan, Hosei University, Shinkin Central Bank Research, Nikkei, BOJ's, NLI Research, Thomson Locations: TOKYO

☆ Japan's base salaries jump most since 1995, puts Bank of Japan's policy into view
▼ + stars: | 2023-07-07 | by ( ) www.cnbc.com time to read: +1 min

Kazuo Ueda, governor of the Bank of Japan (BOJ), far right, speaks during an event at the central bank's headquarters in Tokyo, Japan, on Wednesday, May 31, 2023. Ueda said central banks need to be more careful about how they communicate with increase in their toolkits and advancements in monetary policy making. Global financial markets have been closely watching Japan's wage data, as Bank of Japan Governor Kazuo Ueda regards pay growth as a key gauge to consider in deliberations about a shift in policy. Regular wages rose 1.8% in May from a year before, labor ministry data showed, the biggest gain since February 1995. The strong base pay growth boosted worker's total cash earnings, or nominal wages, by 2.5% in May, after a revised 0.8% increase logged in April.

Persons: Kazuo Ueda, Ueda, Noriaki Sasaki, Kuroda, Hisashi Yamada, Rengo Organizations: Bank of Japan, Yomiuri Shimbun, Bloomberg, Getty, Global, Hosei University Locations: Tokyo, Japan

☆ Japan's base salary growth hits 28-year high in May
▼ + stars: | 2023-07-06 | by ( ) www.reuters.com time to read: +3 min

Base salary soared 1.8% in May year-on-year, the biggest rise since February 1995. BOJ Governor Kazuo Ueda has repeatedly stressed the need to keep policy accommodative until wages increase enough to keep price growth sustainably around its 2% target. The results from the labour talks will be reflected toward the summer, labour ministry officials said. Total cash earnings, or nominal wages, increased 2.5% year-on-year in May, after rising a revised 0.8% in April. Inflation-adjusted real wages, a barometer of households' purchasing power, dropped 1.2% in May from a year earlier, falling for 14 months straight.

Persons: Kazuo Ueda, Rengo, Satoshi Sugiyama, Devika Organizations: Bank of Japan's, Thomson Locations: TOKYO

☆ Japan's firms offer biggest pay hikes in 30 years, wage growth broadens
▼ + stars: | 2023-07-05 | by ( Tetsushi Kajimoto | ) www.reuters.com time to read: +2 min

The final survey of 5,272 unions affiliated with Rengo showed an average pay hike of 3.58%, or 10,560 yen ($73.04) per month, the biggest increase since 3.9% seen in 1993. Among them, SMEs raised wages by 3.23%, also the fastest pace in three decades. What's important from now on is to bring real wages to positive territory," said Hisashi Yamada, economist and Hosei University professor. The pay hikes could provide some political support for Prime Minister Fumio Kishida who has made wages as key part of his policy agenda, as a weak yen and higher import prices drive up living costs. Big firms' summer bonus payments are seen rising 3.9%, up for a second straight year, although gains are likely to be uneven, according to a survey by Keidanren, Japan's biggest business lobby.

Persons: Rengo, Kazuo Ueda, Hisashi Yamada, Fumio Kishida, Tetsushi Kajimoto, Sam Holmes Organizations: Rengo, Bank of Japan, Hosei University, OECD, Thomson Locations: TOKYO

☆ Living standards are still falling in Japan. That’s a recipe for more stagnation
▼ + stars: | 2023-04-12 | by ( Michelle Toh | ) edition.cnn.com time to read: +5 min

Adjusted for inflation, wages slipped 2.6% in February, compared to the same month a year earlier, according to government data released last week. That means it’ll be tough for Ueda to hike interest rates, especially as living standards aren’t rising either. The issue of stagnant wages could improve this year, as companies heed the call to raise salaries in response to inflation. Workers in Japan have been grappling with stagnant wages, leading to a government push for businesses to hike pay. But in Japan, it’s high enough to feel uncomfortable, given stagnant wage growth, according to Angrick.

REUTERS/Maxim Shemetov/File PhotoTOKYO, March 17 (Reuters) - Japan's major companies have concluded their annual labour talks with average wage hikes of 3.8% for the coming fiscal year, the largest raise in about three decades, trade union confederation Rengo said on Friday. The preliminary survey of 805 unions affiliated with Rengo showed the average hike rate of 11,844 yen ($89) per month, according to the labour organisation. "Many unions received in full or exceeded their demand for wage hikes," Rengo chief Tomoko Yoshino told a news conference. Those businesses have often struggled to pass on rising costs to their customers. It's unclear whether the rising wage trend will be sustainable, let alone create the "virtuous cycle" of stronger economic growth and 2% inflation long sought by Japan's central bank.

☆ Japan's big firms offer largest pay rises in decades
▼ + stars: | 2023-03-15 | by ( Tetsushi Kajimoto | ) www.reuters.com time to read: +4 min

The Rengo umbrella labour group has called for a 5% pay increase. The JERC survey showed that excluding seniority-based pay, base compensation that boosts fixed labour costs accounts for just 1.08%. "We need to focus on base pay. Workers from Japan's largest group of trade unions last week struck early agreements for hefty wage hikes. Unions have historically tended to settle for relatively meagre pay hikes around 2% in recent years, as unions are inclined to cooperate with management in keeping job security rather than aggressively demanding pay rises.

The precedent set at the "shunto" spring wage talks also influences wages at smaller firms that employ seven out of 10 Japanese workers. The shunto wages eventually peaked in 1974 with a record 33% rise in pay. Wary of increasing fixed costs, many Japanese firms have long opted to pay one-off bonuses in good times rather than raise base pay. Economists projected a 2.85% wage increase in a January poll, with base pay increases accounting for 1.08% and 1.78% from an increase in additional salary, based on seniority. Asked whether they would carry out base pay increase, 41.6% said they intended to.

The precedent set at the "shunto" spring wage talks also influences wages at smaller firms that employ seven out of 10 Japanese workers and supply big manufacturers. The focus on job security, rather than higher pay, is blamed for keeping Japan's wage growth stagnant. WHAT WILL BE THE OUTCOME OF THE WAGE TALKS? Analysts expect big firms to offer wage hikes of around 3% in wage talks, which would be the fastest pace of increase since 1997 when Japan was on the cusp of deflation. Kishida has approached Japan's union umbrella Rengo in prodding firms to hike base pay.

It will also test Prime Minister Fumio Kishida's flagship "new capitalism" policy that aims to more widely distribute wealth among households by prodding firms to hike pay. World's largest car maker Toyota (7203.T) accepted a union demand for the biggest base salary growth in 20 years, while gaming giant Nintendo (7974.T) plans to lift base pay by 10%. The gain will comprise a 1.08% rise in base pay and a 1.78% increase in additional salary based on seniority, it said. Uncertainty over the sustainability of wage hikes could prod the BOJ to go slow in dialing back stimulus, some analysts say. The BOJ will probably wait until next year in doing anything radical, such as ending its bond yield control policy."

☆ Japan unions ask average 4.5% wage hike, biggest since 1990s
▼ + stars: | 2023-03-04 | by ( Kantaro Komiya | ) www.reuters.com time to read: +2 min

A survey of more than 2,000 unions nationwide showed an average 4.49% raise request for this year, first time above 4% since 1998's 4.36%, according to the Japanese Trade Union Confederation (JTUC). Despite the higher cost burden, major Japanese firms have promised large pay increases to retain skilled workers amid labour crunch. The JTUC preliminary survey showed the average union demand during this year's annual labour talks, called "shunto" in Japanese, was much larger than 2022's 2.97%. JTUC, commonly known as "Rengo", is the largest labour organisation in the country representing about seven million workers. Bank of Japan officials have said the outcome of the wage hikes is an important criterion to determine the future course of its ultra-loose monetary policy.

☆ With backing from business lobby, Japan PM calls for workers' pay hikes
▼ + stars: | 2023-02-26 | by ( ) www.reuters.com time to read: +2 min

"Above all, wage hikes that beat price hikes are needed," Kishida told an annual gathering of his ruling Liberal Democratic Party (LDP), which lays out its policy agenda for this year. "The wave of wage hikes must spread to small firms and local areas to enhance competitiveness amid heated competition to attract workers" amid labour shortages, Kishida said. While achieving "structural wage hikes," Kishida pledged to continue to take steps to curb energy and food prices to ease the pain of inflation on households. Masakazu Tokura, head of Japan's biggest business lobby Keidanren, expressed support for the wage push. Moreover, the small companies that provide most of Japan's jobs generally can't increase pay, business owners, economists and officials say.

Last month, he called on companies to hike pay at a level above inflation, with some already heeding the call. Last month, Japan recorded its biggest drop in earnings, once inflation is taken into account, in nearly a decade. A changing job marketExperts say Japan’s wages have also suffered because it lags in another metric: its productivity rate. Hideya Tokiyoshi, a teacher in Japan, told CNN he had barely seen his salary go up over the last 30 years. “If some of the biggest companies in Japan raise wages, many other firms will follow,” if only to stay competitive, said Yamaguchi.

☆ Japan Inc strives to lure skilled workers as inflation, labour crunch bite
▼ + stars: | 2023-01-30 | by ( Tetsushi Kajimoto | ) www.reuters.com time to read: +7 min

[1/2] A worker assembles an air drill at the factory of manufacturer Katsui Kogyo in Higashiosaka, Japan June 23, 2022. About a quarter of Japanese firms have offered inflation allowances or plan to do so, said corporate credit research firm Teikoku Databank. read moreThe private sector expects the drive to help boost productivity, meshing with Prime Minister Fumio Kishida's "new capitalism" initiative on wealth distribution that put a top priority on wage hikes. "Bonuses or inflation allowances would have only a limited impact on easing the pain of cost-push inflation, as consumers tend to save one-off payouts rather than spend," added Kiuchi, now an executive economist at the Nomura Research Institute. Workers have high expectations from this year's labour talks, which they hope will counter cost-push inflation while tackling the tight labour market to help boost the economy.

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