Abenomics pushing companies to higher wages… Get ’em
Well, it is about time for a higher authority to push strongly for higher wages. The Wall Street Journal has an article about the Bank of Japan’s Governor, Haruhiko Kuroda. Basically, companies need to use their increased profits and reserves to raise labor’s pay. If companies do not raise labor’s pay significantly, Abenomics will fail.
Edward,
In December 2013, Prime Minister Abe was pushing corporations to raise wages more than they raise prices. There was a temporary bump. Here is a link to a page with links on this subject:
http://japandailypress.com/tag/wage-increase/
So now Bank of Japan Governor Kuroda is pushing.
They have been in their current downturn for about 23 years now. It appears that they are beginning to accept that neither monetary nor government fiscal can save their economy. Time to try something with the real economy. You know that this has not been an easy decision to make.
If we follow the same schedule, then we will get there in 2031.
Hey Edward, these guys are trying to raise labor share. How about that!
JimH,
2031? OMG… We’ll figure it out sooner than that. Got to.
I thought Abenomics was failing because the politically connected and the financial scum were getting all the benefits.
If all it takes is higher wages what’s the purpose of Abenomics then (well, other than rewarding the politically connected and the financial scum I mean, of course)?
Edward,
Japan’s nightmare began in 1991, so 2014-1991 = 23 years. And for the US, 2008+23 = 2031.
If Japanese companies actually raise wages for a year or so then they should see an improving GDP. But once consumers lose trust, they might save instead of spend. In that case GDP might not improve much.
If Japan’s GDP did improve, that would be a message, loud and clear. American economists might grab that fact and run with it then.
But I have become pessimistic about American economists. This will require a complete rethinking of their belief system. I think they would need to see 4 quarters before they jump on the band wagon.
And this discussion depends on Japanese companies voluntarily raising wages significantly. Can a CEO get away with that without being fired?
We live in interesting times.
Yes Edward, Wages are up in Japan.
But so is inflation (thanks to the devaluation of the Yen). Inflation is well over 3% thanks to Abenomics. Wages will rise by less than inflation, so the net of this will be a negative.