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Japan firms heed PM call to boost salaries

[TOKYO] Major firms on Wednesday announced pay rises for workers after sustained pressure from the government in its bid to push up prices in long deflationary Japan.

Prime Minister Shinzo Abe's drive to get Japan economically ship-shape with a mix of easy money and fiscal largesse has born some fruit since its launch two years ago in the form of soaring stock prices and a falling currency.

But stagnant salaries have been one of the main missing links in the "virtuous circle" of growth that the premier's signature "Abenomics" plan envisages.

With deals from some of Japan's biggest employers announced Wednesday following the annual labour talks - known as "shunto", or the "spring offensive" - it appeared the prime minister was at least partially getting his way.

The world's biggest automaker Toyota said it would raise employees' pay by an average of 4,000 yen (US$33) a month - about 1.14 per cent above current pay.

Toyota employees would also get an average bonus worth 6.8 months of their base wage - a common pay structure in Japan, the company said. The firm now expects to book a record 2.13 trillion yen (US$18.1 billion) net profit in the fiscal year to March.

Last year, the Corolla and Prius hybrid maker gave the first wage hike in six years.

Japan's second-largest automaker Nissan agreed to give an even bigger raise of 5,000 yen a month, and a bonus worth 5.7 months of employees' base wage, the company said.

"We've had thorough discussions on the very difficult challenge of becoming more competitive... while contributing to sustaining a good economic cycle," Toyota managing officer Tatsuro Ueda told reporters.

Major electronics firms, such as Panasonic and Toshiba, agreed to give a unified wage hike of 3,000 yen a month, bigger than last year's 2,000 yen.

Pay rises have taken on an extra significance since a precipitous sales tax hike in April last year dented the economy's frail recovery.

The sales tax rise - Japan's first in 17 years - slammed the brakes on consumer spending, plunging the economy into recession and throwing Abe's growth-boosting programme into question.

The plunge in the value of the yen, while helping exporters, reduced spending power at home because it made imports more expensive.

Official data have shown that Japanese household spending in 2014 declined at its fastest pace in eight years, underscoring how badly clobbered the average Japanese felt.