Japan Inc tries to attract skilled workers when inflation, labor crisis
© Reuters. FILE PHOTO: A worker assembles an air drill at manufacturer Katsui Kogyo’s factory in Higashiosaka, Japan June 23, 2022. REUTERS/Sakura Murakami/File Photo
By Tetsushi Kajimoto
TOKYO (Reuters) – From inflation subsidies to workers’ re-skilling, companies in Japan are stepping up efforts to help employees combat soaring prices and a labor crisis, despite a the number of people who cannot afford the wage increases that offset cost-push inflation.
As the annual labor “exit” negotiations get in the way, momentum from both labor and management is growing, prompting companies to offer such increases to ease, even if not beat consumer inflation, which hit a 41-year high of 4% in December.
At the spring session of the labor talks, scheduled to end in mid-March, major companies, such as Toyota Motor (NYSE:) Corp., is in talks with internal unions to set salaries for the upcoming fiscal year from April.
Labor shortages and rising consumer inflation, double the central bank’s 2% target, are spurring companies to be cautious, with internal reserves worth 500 trillion yen (3.85 trillion yen) trillion USD), increased wages.
About a quarter of Japanese companies have provided inflation subsidies or plan to do so, said corporate credit research firm Teikoku Databank. Such allowances range from 6,500 yen ($50) on average for monthly payments to 54,000 yen at a time.
Shinichiro Mori, who received a one-time allowance of 150,000 yen last summer from group software developer Cybozu Inc, one of about 800 employees working on this, said: “I received the amount of money. right after we gave birth to our second child.
“I appreciate the money,” Mori, 41, told Reuters. “We used that money to buy baby items, utility bills and other living expenses, because we stayed at home all day to take care of the children.”
News that Fast Retailing Co, operator of the Uniqlo clothing chain, will revise its employee pay system, with salary increases of up to 40%, is another example.
The private sector expects the effort to boost productivity, in line with Prime Minister Fumio Kishida’s “new capitalism” initiative on wealth distribution, which places a high priority on increasing wealth. wage.
Such demands by Japanese policymakers come against a backdrop of 15 years of severe deflation that forced companies to shelve raising basic wages from the early 2000s to the early 2010s, when stimulus spending failed to boost economic growth, but instead piled up public debt.
SUSTAINABLE Wage INCREASE
OECD data shows that the wages of Japanese workers have increased by about 5% in the 30-year period since 1990, during which American wages increased 1.5 times and Korean wages doubled.
Takahide Kiuchi, a former Bank of Japan board member, called for the pay increase to be sustained over time so that cumulative pay increases can offset price increases in the long run.
Kiuchi, now an executive economist at Nomura Research Institute, added: “Bonuses or inflation subsidies will have only limited impact in alleviating the pain of cost-push inflation, as consumers Consumers tend to save on one-time payments instead of spending.
The government and central bank say inflation must rise in tandem with wage growth to spur private consumption, which accounts for more than half of the economy, paving the way for the Bank of Japan to achieve its inflation target in a sustainable manner. steady and steady.
But one-time payments don’t make consumers more confident about spending increases, although a base-wage increase, a component of wages that’s hard to reverse, is more likely to boost that confidence and make workers spend more.
The latest data showed real wages fell 2.5% in November, a ninth straight month of decline, following a 3.8% decline the previous month.
Mori’s employer, Cybozu, has offered record pay increases to employees at the highest rate of 1% to 10% this year.
That would exceed the Kishida government’s target of 3%, and even the 5% set by the Confederation of Trade Unions of Japan (Rengo), while Japan’s largest business lobby Keidanren urged companies The company offers a positive salary increase, including base salary.
“We have always felt the need to meet the labor shortage of engineers,” said Yumika Nakane, the company’s head of human resources. “We set the pay scales because we are fully aware that salary is one of the key factors to attract workers.”
While the unemployment rate of 2.5% in November reflects a tight labor market and steady job availability, at a rate of 1.35 per jobseeker, policymakers complain about the absence of demand-pull inflation leading to wage increases.
At this year’s tacit talks, big companies are likely to offer the biggest pay increases in 26 years, or an average of 2.85% for the fiscal year that begins in April, a poll of 33 employers said. Economics by the Japan Economic Research Center (JERC).
However, small firms, employing 7 out of 10 workers, face dire situations and more than 70% of them have no plans to raise wages, a separate poll by Jonan Shinkin Bank and Tokyo Shimbun newspaper shows.
To push small businesses in this direction, the authorities want to improve labor productivity and encourage more workers to move into industries with better growth prospects, provided they will not unemployed.
Kishida’s government plans to tap into human resources worth 1 trillion yen over the next five years, providing new support to companies recruiting mid-career workers as well as re-skilling efforts to promote increase labor revenue.
Workers have high hopes for this year’s labor talks, which they hope will combat cost-push inflation while also addressing a tightening labor market to help prop up the economy.
Some companies are ready to take the initiative.
For example, Internet media company Cyberagent’s “reskilling center” trained 200 IT engineers, upskilling them to match the company’s needs, in addition to earning attract engineers from the outside.
From this spring, it will also increase the starting salary for new graduates by 12% to 420,000 yen.
Hiroto Minegishi, general manager in charge of technical human resources at the company said: “As the IT industry faces a shortage of engineers, we can contribute to solving the labor shortage by providing training. human resources, which is our strength.
“As a result, we can help increase wages and improve productivity across the IT industry.”
($1 = 129,9700 yen)