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Only 18% of Japan’s Firms Planning 3% Pay Hikes in Nikkei Survey

Only 18% of Japan’s Firms Planning 3% Pay Hikes in Nikkei Survey

Less than a fifth of Japan’s biggest firms plan on raising pay at the pace targeted by Prime Minister Fumio Kishida, according to a Nikkei survey, highlighting the heavy lifting the premier faces as he tries to get firms to redistribute more income to workers.

The survey of major company chief executives showed only 18% intended to boost pay by 3% or more at upcoming spring labor negotiations. Some 43% of firms said they’ll hike pay by 2% to 3%, while around 10% of companies said they won’t raise paychecks at all, the poll showed.

Only 18% of Japan’s Firms Planning 3% Pay Hikes in Nikkei Survey

Of 140 CEOs responding to the newspaper’s main business outlook survey, only 61 gave specific answers on their wage plans.

Kishida has made raising pay a key policy objective of his administration. He has adjusted tax rules to favor firms that hike pay, and pledged to boost the paychecks of kindergarten workers and caregivers to the elderly by 9,000 yen ($78) a month. 

Whether companies listen to his request to push up wages more aggressively this spring will offer an early sign of whether Kishida can gain traction for his vision of building a more forward-looking and egalitarian style of capitalism in Japan. 

Success in pushing forward his policy agenda, keeping the virus contained and ensuring the economy recovers are factors that will shape the result of an upper house election next summer. The outcome will likely determine whether Kishida gets more time to push forward his new capitalism vision or whether he joins a long list of one-year premiers. 

Economists doubt Kishida will be able to budge firms enough to make a difference. In a Bloomberg poll of economists, only 11% thought Kishida will have more success at raising wages than one of his predecessors, Shinzo Abe. 

Japan’s largest business lobby Keidanren has already declared that they won’t ask members to implement an across-the-board increase in wages in the spring labor talks. 

Still, there are some signs that companies may be listening to Kishida’s call. 

Seiji Nakata, chief executive of Daiwa Securities Group Inc., told Bloomberg this month that the company is considering raising base salaries and one-time payments, excluding bonuses, by an average 3% or more starting April.

©2021 Bloomberg L.P.