PM Kishida and Pay Hikes:

 Article Source: https://mainichi.jp/english/articles/20221004/p2g/00m/0bu/040000c

Article:

TOKYO (Kyodo) -- Japanese Prime Minister Fumio Kishida on Tuesday asked companies to aim for pay hikes that keep pace with accelerating inflation in wage negotiations next spring, as he seeks to achieve both economic growth and redistribution amid the rising cost of living.

Smoothing the way for wage growth, the government will expand subsidies for small and midsize firms on condition that they raise pay, according to a government plan.

It will also prod bigger companies to accept higher prices set by subcontractors by making public the names of those that refuse to do so repeatedly or without providing justification.

Ideas:

Most likely for companies to keep pace with inflation by increase pay hikes is reducing their profit margins even more. Yes, its needed and very important but many companies might not be in a position to increase wages.

Their profit margins are already reduced, even though they might passed on some or all of their costs because of material and energy costs, and to increase wages means their profits margin are going to be less and they might have to pass on even more of their costs.

At the present time is a no win situation for some companies. Even if the Japanese govt. does provide subsidies, are the subsidies able to counter the continued increase in costs.

Perhaps some or many big companies have too much market power and dictate to the smaller subcontractor companies what prices they can charge. If they don't comply the bigger company might find a new supplier.

Article:

"I hope negotiations will take place between management and labor unions to realize pay hikes that can make up for inflation," Kishida told a government panel meeting on creating a "new form of capitalism."

The request was included in a list of priority items that will go into a new economic package to be compiled later this month. Kishida has already instructed officials to focus on three areas -- coping with inflation and a weak yen, spurring wage growth, and achieving growth through investment and reform.

Wage growth is critical for Kishida's stated policy of promoting wealth redistribution and for the Bank of Japan, which has shown no signs of changing its ultralow rate policy.

Ideas:

Companies might be willing to increase wages but most likely not enough to end inflation or even match inflation.

Just what is "a new form of capitalism" really mean. It seems like is kind of like the "trickle down" policy might mean as the companies increase wages it profits move down to where there is more for workers in society. 

But there might not be enough companies willing to increase wages enough to have an impact on society or inflation, meaning not enough of society will see increases in wages which means they just won't be enough for significant improvement in consumer spending.

Its a case of the chicken and the egg and which comes first or what should come first. Should there be significant increase in demand and consumer spending first or should there be a significant increase in wage growth before consumer spending increases.

Article:

Japan is known for its persistently slow wage growth, low labor productivity and low job mobility. Russia's war in Ukraine has sharply increased energy, raw material and grain prices, accelerating inflation. This has highlighted the need for more robust wage growth amid the rising cost of living.

The plan does not give a specific numerical target, but Japan's core consumer inflation, which excludes volatile fresh food, has been accelerating toward 3 percent. For this year's annual negotiations between management and labor unions, Kishida called for major Japanese firms that had seen their earnings recover to pre-pandemic levels to raise wages by 3 percent or more.

In the end, Japanese firms agreed to an average 2.07 percent pay raise, topping the 2 percent threshold for the first time in three years, according to data from the Japanese Trade Union Confederation, or Rengo.

Ideas:

There might be a definite need for more wage growth but with energy and material costs increasing some companies might not have any room in their profit margins for any increase in costs.

A 2.07 percent increase is good and very needed but does it help with wage earners and the costs on inflation in their everyday lives.

Companies are not responsible for the increase in energy and material cost increases but they can play their part by, if possible, by increasing wages to help society whenever they can.

A company that has reached the pre-pandemic level in earing again should show it cares about its employees and those in society by increasing wages to an appropriate level to match inflation.

Article:

The plan discussed Tuesday at the meeting also seeks to reform the country's labor market over the medium- to long-term by promoting a shift from seniority-based pay, still prevalent in Japan, to one that is based more on job descriptions and responsibilities.

The government aims to invest 1 trillion yen ($6.9 billion) over the next five years in human resource development by enabling people to learn new skills and making changing jobs easier.

Ideas:

Reforming Japan's labor market might take more than ten years as there are probably many traditional companies which either refuse or just don't know how to reform or change.

What Japan has to be very careful that it doesn't go too far into performance based reform and Japan needs to have a balance between its does good already and not lose its humanity in the work place.

One area its can improve on is more work life balance in less working hours. The global trend is less hours in the workplace and young workers today don't want to work like those in back in the day.

Article:

Fostering startups in Japan is another key area for growth as Kishida wants to see stepped-up efforts by Japanese firms to solve social challenges that can lead to economic growth.

The government will aim for at least one startup spawned at each national university to launch an initial public offering.

Ideas:

The challenge with startups is the environment has to be that is a startup fails they can come back with a new or better idea. But unfortunately if they fail they are branded as losers and they don't try again.

The Japanese government which a program that supports startups even if they fail with the funds to try again even again for a certain period of time.

Companies also need to be involved in helping startups with its young and promising employees who have new and innovative ideas.

Denstu was trying to do something like it by helping its employees with some kind of spin-off business as they were either retiring or looking for other kinds of work.

Have a nice day and be careful!