Over half of Japan firms do not plan base pay rise in 2018 - RTRS corporate survey

According to the latest monthly Reuters Corporate Survey of the Japanese companies, more than 50% of the country’s firms do not plan to raise base pay in annual wage talks in coming months.

Japan’s PM Shinzo Abe and the Keidanren business group have sought a 3% wage rise to boost consumption and inflation.

Key Findings:

“Just less than half said they would raise pay and most in this group said the increase would be similar to last year’s level of about 2 percent.

In the past four years, major companies agreed to raise wages about 2 percent at annual wage negotiations with labor unions, a benchmark that sets the tone for talks across the country.

The bulk of that - about 1.8 percent - comes automatically under Japan’s seniority-based employment system. Anything beyond that is a hike in “base pay.”

But many firms are wary of raising wages as it commits them to higher fixed personnel costs, so they prefer to pay one-off bonuses instead.

The survey was conducted between Jan 31 and Feb 14 on behalf of Reuters by Nikkei Research. Of some 240 companies that responded, 52 percent said they would not raise base pay.“