Only 18% of Japan's firms planning 3% pay hikes: survey

[TOKYO] Less than a fifth of Japan's biggest firms plan on raising pay at the pace targeted by Prime Minister Fumio Kishida, according to a Nikkei survey, highlighting the heavy lifting the premier faces as he tries to get firms to redistribute more income to workers.

The survey of major company chief executives showed only 18 per cent intended to boost pay by 3 per cent or more at upcoming spring labour negotiations. Some 43 per cent of firms said they'll hike pay by 2-3 per cent, while around 10 per cent of companies said they won't raise paychecks at all, the poll showed.

Of 140 CEOs responding to the newspaper's main business outlook survey, only 61 gave specific answers on their wage plans.

Kishida has made raising pay a key policy objective of his administration. He has adjusted tax rules to favor firms that hike pay, and pledged to boost the paychecks of kindergarten workers and caregivers to the elderly by 9,000 yen (S$106) a month.

Whether companies listen to his request to push up wages more aggressively this spring will offer an early sign of whether Kishida can gain traction for his vision of building a more forward-looking and egalitarian style of capitalism in Japan.

Success in pushing forward his policy agenda, keeping the virus contained and ensuring the economy recovers are factors that will shape the result of an upper house election next summer.

The outcome will likely determine whether Kishida gets more time to push forward his new capitalism vision or whether he joins a long list of 1-year premiers.

Economists doubt Kishida will be able to budge firms enough to make a difference. In a Bloomberg poll of economists, only 11 per cent thought Kishida will have more success at raising wages than one of his predecessors, Shinzo Abe.

Japan's largest business lobby Keidanren has already declared that they won't ask members to implement an across-the-board increase in wages in the spring labour talks.

Still, there are some signs that companies may be listening to Kishida's call. Seiji Nakata, chief executive of Daiwa Securities Group, told Bloomberg this month that the company is considering raising base salaries and 1-time payments, excluding bonuses, by an average 3 per cent or more starting April.

BLOOMBERG