Japan Inc strives to lure skilled workers as inflation, labour crunch bite
30/01/2023 23:00
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Momentum gathers for wage hikes in 'shunto' labour talks
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Some firms offer one-off inflation allowances, reskilling
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PM Kishida pushes for wage hikes, labour reform
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'Shunto' wage hikes seen up the most in quarter century
-poll
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Still, don't expect wage hikes to outpace inflation
immediately
By Tetsushi Kajimoto
TOKYO, Jan 31 (Reuters) - From inflation allowances to
the reskilling of workers, firms in Japan are stepping up
efforts to help employees fight rising prices and a labour
crunch, even though some cannot afford pay hikes that do more
than offset cost-push inflation.
As annual "shunto" labour talks get into full swing,
momentum from both labour and management is growing for firms to
offer such hikes to cushion, even if not beat, consumer
inflation, which hit a 41-year high of 4% in December.
At the spring session of the labour talks, set to wrap in
mid-March, major firms, such as Toyota Motor Corp 7203.T ,
negotiate with in-house unions to set wages for the coming
fiscal year from April.
Labour shortages and rising consumer inflation, which is
double the central bank's target of 2%, are spurring cautious
firms, with a 500-trillion-yen ($3.85 trillion) hoard of
internal reserves, to hike wages.
About a quarter of Japanese firms have offered inflation
allowances or plan to do so, said corporate credit research firm
Teikoku Databank. Such allowances range from 6,500 yen ($50) for
monthly payments to 54,000 yen in lump sums, on average.
"I received the money just when we had our second baby,"
said Shinichiro Mori, who received a one-off allowance of
150,000 yen last summer from groupware developer Cybozu Inc, one
of about 800 employees to do so.
"I appreciated the money," Mori, 41, told Reuters. "We spent
it on baby goods, utility bills and other living expenses, as we
stayed home all day taking care of our baby."
News that Fast Retailing Co 9983.T , operator of the Uniqlo
clothing chain, will revise its pay system for employees, with
raises as much as 40%, provides another example. urn:newsml:reuters.com:*:nT9N2XY01I
The 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.
Such demands by Japanese policymakers come against the
backdrop of 15 years of grinding deflation that saw firms shelve
hikes in base salary from the early 2000s to the early 2010s,
when rounds of stimulus spending failed to spark economic
growth, but piled up public debt instead.
SUSTAINABLE PAY HIKES
OECD data shows Japanese workers' wages have grown about
5% over a period of 30 years from 1990, during which U.S. pay
rose 1.5 times and pay for South Koreans doubled.
Takahide Kiuchi, a former member of the board of the Bank of
Japan, called for wage hikes to be sustained over time so that
cumulative pay rises could offset price hikes in the long run.
"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.
The government and the central bank say inflation must grow
in tandem with wage growth to fuel private consumption, which
accounts for more than half the economy, paving the way for the
Bank of Japan to achieve its inflation target in a sustainable,
stable fashion.
But one-off payments do not make consumers more
confident about increasing spending, although a rise in base
pay, a salary component that is hard to reverse, is more likely
to boost such confidence and set workers spending more.
Real wages fell 2.5% in November, down for the ninth
straight month, following the previous month's decline of 3.8%,
the latest data shows.
Mori's employer, Cybozu, has offered employees a record pay
hike in the upper reaches of the 1% to 10% range this year.
That would surpass the 3% target of Kishida's government,
and even the 5% sought by the Japan Trade Union Confederation
(Rengo), while Japan's biggest business lobby Keidanren urged
companies to offer positive wage hikes, including base pay.
"We always feel the need to respond to labour shortages of
engineers, in particular," said Yumika Nakane, the firm's human
resources head. "We set pay scales as we're fully aware salary
is one of the keys to attract workers."
Despite a jobless rate of 2.5% in November that reflects
the tight labour market, and steady job availability, at a ratio
of 1.35 per seeker, policymakers complain about the absence of
demand-pull inflation that entails wage growth.
LABOUR TALKS
At this year's shunto talks, large firms are likely to offer
the biggest pay hikes in 26 years, or an average of 2.85% for
the financial year starting in April, a poll of 33 economists by
the Japan Economic Research Center (JERC) showed. urn:newsml:reuters.com:*:nL1N3410Q0
However, small firms, which employ seven of every 10
workers, face a severe situation, and more than 70% of them have
no plan to raise wages, a separate poll by the Jonan Shinkin
Bank and the Tokyo Shimbun newspaper showed.
To push small firms in this direction, authorities want to
improve labour productivity and encourage more workers to switch
to industries with better prospects for growth, provided that
they will not lack for employment.
Kishida's government plans to tap 1 trillion yen over the
next five years in human resources, providing new support for
firms hiring mid-career workers as well as for reskilling
efforts to spur labour turnover.
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.
Some companies are ready to take the initiative.
For instance, Internet media firm Cyberagent's "reskilling
centre" has trained 200 information technology engineers,
upgrading their skills to match its needs, besides wooing
engineers from outside.
From this spring, it will also raise the starting salary for
new graduates by 12% to 420,000 yen.
"As the IT industry faces a lack of engineers, we can
contribute to resolving the labour crunch by cultivating human
resources, which is our strength," said Hiroto Minegishi, the
firm's general manager for technical human resources.
"As a result, we can help wages growth and enhance
productivity across the IT industry."
($1 = 129.9700 yen)
(Reporting by Tetsushi Kajimoto; Editing by Clarence Fernandez)
((tetsushi.kajimoto@thomsonreuters.com;))