Keidanren upbeat on pay hike prospect

(THE JAPAN NEWS)Sadayuki Sakakibara, chairman of the Japan Business Federation (Keidanren), said Thursday he “expects next year’s wage hike to exceed this year’s” at companies with good performance.

The wage increase — the total of a regular pay hike and pay-scale increase — reached 2.52 percent at the spring labor offensive in 2015.

Sakakibara made his remark during a session to exchange opinions between the government and the business world. Afterward he told the media that Keidanren “plans to ask [companies] for a pay hike on an annual income basis that includes a pay-scale increase and regular pay raises as well as allowances and a bonus.”

The government is calling on Keidanren to bring about successive pay hikes in order to help pull the country out of deflation, and Sakakibara’s remarks indicate that the business sector is willing to accept the request. If realized, there will be a significant wage hike for the third consecutive year.

During the 2016 spring offensive, the Japanese Trade Union Confederation (Rengo) plans to demand a pay hike of about 2 percent, which is about the same level as that in 2015. Keidanren aims to surpass this demand.

During the dialogue, Sakakibara also said Japanese companies’ capital investment is expected to increase from the current ¥70 trillion to about ¥80 trillion in fiscal 2018. To achieve such an increase, Sakakibara urged the government to make efforts to lower corporate tax and promote regulatory reform.

Officials in the government and the ruling parties have complained about the stance of the business sector, saying companies are earning huge profits from Abenomics economic policies, but these are not fully allocated to wage increases or capital investment. Sakakibara’s comment indicates Keidanren’s intention to boost capital investment.

Sakakibara said the ¥80 trillion is “a prospect and also a goal. The figure shows the enthusiasm of Japanese companies.”

The business world was initially wary about the government’s “intervention” in companies’ managerial decisions, but decided to indicate a positive outlook on the condition that the government will improve the business environment.

During the session, Prime Minister Shinzo Abe said, “We praise the policy proposed by the industrial community and expect companies to implement its policy faithfully.” Abe also said the government would work on lowering cooperate tax and promoting regulatory reform.