The largest automaker in the world and the biggest company in Japan, Toyota Motor, was the latest to agree to lift worker base wages by the largest amount in more than a decade, but it appears that Japan Inc. has a longer way before meeting the increased cost of living.
Most of the Japanese companies plan to lift base salaries for their employees by at least the same amount as they did last year, but in many cases the higher wages (combined with the year ago increase) will still fall short of compensating the 2014 sales tax raise. Since coming into office back in 2012, Prime Minister Shinzo Abe has pressured businesses to increase salaries – seen as a crucial step towards lifting consumer confidence and demand, needed to snatch the world’s third biggest economy out of decades of deflation and feeble growth. A Reuters poll showed that most of the companies in Japan plan to raise base salaries between zero and 2 percentage points, not enough to offset the 3 percent sales tax hike that was introduced last April – and a key factor for driving the country into an unexpected recession.
Meanwhile, at the top of Japan companies, Toyota agreed to lift monthly base wages of its workers by 4,000 yen ($33), the largest raise in years – though smaller than its union proposal of 6,000 yen. Additionally, top companies such as electronics firm Panasonic Corp and second-biggest Japanese automaker Nissan Motor also announced planned increases of 3,000 yen and 5,000 yen respectively.