20 Jan 2016
Japan: Wage increases not gaining momentum - Nomura
FXStreet (Bali) - Yujiro Goto, FX Strategist at Nomura, notes that the BOJ’s regional survey of corporates’ wage-setting behaviour showed mixed results on the outlook for wages.
Key Quotes
In terms of base salary increases into the next fiscal year, the survey said most firms have not yet decided on their plans, as wage talks have not started yet.
At the same time, more companies, especially in urban areas, are considering increasing wages. Nonetheless, the survey also notes that some companies, especially small to medium-sized companies in rural areas, are cautious about wage increases and think it will be difficult to increase base salaries.
Companies expecting higher profits appear to be more positive on base salary increases, while those with an uncertain profit outlook are more cautious on wage increases.
In addition, the lower expected growth in Japan and a preference for increasing investment (capex and M&A) rather than hiking wages are viewed as reasons not to raise base salaries. The survey concludes that the labour market is likely to remain tight, but firms’ inclination to raise wages in the next fiscal year is not gathering steam at this point.
Governor Kuroda last week said wage gains have been somewhat muted considering the job market and profits, and the survey is unlikely to make his assessment more positive. The latest survey showed researchers’ expectations for January easing have declined but should recover as market conditions remain volatile.
Key Quotes
In terms of base salary increases into the next fiscal year, the survey said most firms have not yet decided on their plans, as wage talks have not started yet.
At the same time, more companies, especially in urban areas, are considering increasing wages. Nonetheless, the survey also notes that some companies, especially small to medium-sized companies in rural areas, are cautious about wage increases and think it will be difficult to increase base salaries.
Companies expecting higher profits appear to be more positive on base salary increases, while those with an uncertain profit outlook are more cautious on wage increases.
In addition, the lower expected growth in Japan and a preference for increasing investment (capex and M&A) rather than hiking wages are viewed as reasons not to raise base salaries. The survey concludes that the labour market is likely to remain tight, but firms’ inclination to raise wages in the next fiscal year is not gathering steam at this point.
Governor Kuroda last week said wage gains have been somewhat muted considering the job market and profits, and the survey is unlikely to make his assessment more positive. The latest survey showed researchers’ expectations for January easing have declined but should recover as market conditions remain volatile.