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JAPAN – MORE THAN HALF OF FIRMS DO NOT PLAN TO RAISE BASE PAY IN 2018

More than half of Japan’s companies do not plan to raise base pay in annual wage talks in coming months, according to survey data from Reuter and Nikkei Research.

The survey data comes after Prime Minister Shinzo Abe and economic organisation Keidanren have called for wage rises of 3% to revitalise the economy and encourage consumption and inflation.

The data, which polled 240 companies, showed 52% said they would not raise base pay. The remaining 48% said they intend to raise base pay, but the majority (76%) of this group said the rise will be the same as last year’s rise of approximately 2%.

In the past four years, major companies agreed to raise wages about 2% at annual wage negotiations with labour unions. The bulk of that, about 1.8%, comes automatically under the seniority-based employment system. Anything beyond that is a hike in “base pay.” But many firms are cautious of hiking wages as it commits them to higher fixed personnel costs, so they prefer to pay one-off bonuses instead.

According to Reuters, base salary accounts for the bulk of monthly wages. Raises in base pay had been virtually frozen since the early 2000s amid the persistent deflation.

Source: staffingindustry.com