Corporate credit research firm Teikoku Databank said nearly a quarter of Japanese firms offered inflation allowances or plan to do so. Such allowances range from 6,500 yen ($50) for an average monthly payment to 54,000 yen in a lump sum.
Shinichiro Mori said, “I got the money when we had our second child.”
“I appreciated the money,” Mori, 41, told Reuters. “We spent it on baby stuff, utility bills, and other living expenses because we stayed home all day taking care of our baby.”
The news that Fast Retailing Co., operator of the Uniqlo clothing chain, will revise its pay system for employees, with increases of up to 40%, provides another example.
The private sector hopes the campaign will help boost productivity, with Prime Minister Fumio Kishida’s “new capitalism” initiative on wealth distribution placing top priority over wage increases.
Such demands by Japanese policymakers come against the backdrop of 15 years of severe deflation, in which firms avoided raising base wages from the early 2000s until the early 2010s, when periods of stimulus began to spur economic growth. failed, but instead piled up the public debt.
continuous increment
OECD data shows that wages for Japanese workers rose by about 5% over a 30-year period from 1990, while US wages rose 1.5 times and South Korean wages doubled.
Takahide Kiuchi, a former member of the Bank of Japan’s board, called for wage increases to be staggered over time so that cumulative wage increases can offset price increases in the long run.
“Bonus or inflation allowances will have only a limited effect on easing the pain of cost-push inflation, as consumers save lump sum payments rather than spend,” said Kiuchi, an executive economist at the Nomura Research Institute.
The government and the central bank say inflation must rise in tandem with wage growth to spur private consumption, which accounts for more than half the economy, leading the Bank of Japan to meet its inflation target in a sustainable, steady fashion. paves the way for attainment.
But the one-time payment does not make consumers more confident about increasing spending, although an increase in base pay, a wage component that is harder to reverse, is more likely to boost such confidence and make workers spend more. .