Only a few Japanese companies are planning to hike the wages of their employees in the coming business years according to a poll conducted by Reuters. Big players such as Toyota Motor Corp. and Hitachi Ltd. are poised to give increases following big profits from the previous business year but other companies are not keen on following their example.
Most of the companies said that they are considering raising their employees’ bonuses, which comprises 17% of a Japanese employee’s total compensation, as it is easier to take back should the economy turn bad. Out of all those who responded to the survey, only 11% plan to increase the total remuneration package, which includes the base pay and bonuses, to accommodate the 3 percent increase in the consumption tax.
While Abenomics has accelerated economic growth and increase in company profits with government spending and monetary easing, the increase in base pay and more capital spending are yet to be seen. Economists stand by the belief that the two are essential in ensuring that the economy will be sustained. However, business executives are approaching the increase with hesitation due to uncertainty in the economy with one saying, “If we went ahead with a fixed increase in wages, we would not be able to respond to fluctuations in business conditions.”
66 percent of the 241 companies who responded to the survey said that they would be willing to increase bonuses but not the base wage. A small 16 percent on the other hand, answered that they do not plan to have any form of increase this year. Shintaro Okuno from Bain & Co. Japan attributes the results with Japanese companies being flexible enough to keep their costs at a minimum.
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