Ishiba's drastic wage hike push may hurt small firms in Japan

"As I'm responsible for protecting my employees, I want to increase their salaries in line with the social trend," he said, adding, "But with our business conditions unchanged, what can I do?"

I wonder if Okayama shacho's compensation and that of his executives also rises and stagnates in accordance with 'business conditions'.

And has done so through the last 30 years of rising Japan Inc. corporate profits and stagnant wages.

Article sounds like it is preparation for the inevitable announcement by Ishiba that ' Strong wage hikes are our heartfelt goal that we have urged for. But, regrettably business conditions are too severe at the moment'.

Kyodo is making a mountain out of a molehill.

How many Japanese pms have pledged and not delivered?

It’s amazing to imagine that politicians are actually able to change the laws of Japan by voting and therefore have the ability to change society-truly amazing!

Stingy employers is what is holding the economy back. If those companies don't want to pay more, then their employees should be encouraged leave and find better jobs, given that there are 130 jobs for every 100 seekers these days.

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I'm sorry. I thought wages were set by the job market in capitalist economies.

How many of those jobs out there are 3k, temporary or part time?

Quite a large number I imagine.

deanzaZZR

I'm sorry. I thought wages were set by the job market in capitalist economies.

The government is always a part of the market. A market without government exists only in a state of anarchy.

NLI's Suzuki said that despite Ishiba's focus on supporting less affluent citizens, "what may arise is a tough environment where those who cannot afford to pay higher salaries will be forced to close their businesses or be absorbed and merged."

I won't shed any tears. It's already long overdue.

Small business attempting to whine about having to offer a living wage to their employees. Then the opposition party, who is supposed to represent the little guys and the left step forward with this,

The leading opposition Constitutional Democratic Party of Japan has also set a wage increase target of the same level. But the party, which receives support from labor unions, also did not mention when to achieve it with several other opposition parties following suit.

Pretty much what the LDP has been doing for the last few lost decades, ‘asking companies to raise wages, pretty please, but when you’re ready (wink).

Ishiba can say all he wants, just like he did before the LDP election. Then as soon as he took office he flipped. LDP will say anything now to garner votes for this election. People need to vote out the LDP.

OK. What economic and/or fiscal policies has Ishiba proposed to increase wages? The biggest driver of wages is increased productivity. We all know that has been in the tank in Japan for decades.

The government is always a part of the market. A market without government exists only in a state of anarchy.

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Amid higher food and energy costs due to Russia's invasion of Ukraine...

It was not the invasion but the pointless, failed sanctions that pushed up food and energy costs for the countries putting on the sanctions.

I know this is a silly thing to say, but when we were in those 30 years of deflation, prices were lower, and people seemed to be able to make a living. Now that we have attained that holy grail of inflation, everything has gone to hell in a handbasket.

As JeffLee always says it is the big companies at the top that have to pay more to the smaller manufacturers, who in turn can pay their workers, but instead they sit upon tons of capital which only benefits a few.

The wage hike will cause unemployment to rise, closure of small business, and basically a slow down of the economy. The rise of wages in California actually will close all fast food chains.

"what may arise is a tough environment where those who cannot afford to pay higher salaries will be forced to close their businesses or be absorbed and merged."

That sounds like a normally functioning business environment to me, no?

Japan has been too attached to the idea of stability, rather than dynamic change. Those business that lose out to competition or various sorts are no loss, and those that are put out by it simply have to move on to that next opportunity in their lives.

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A political desire is irrelevant if there is not a legally mandated minimum wage. Even then, only the minimum wage is mandated. Anything above that is set by employers. Above any minimum wage (which Japan may not even have) employers operate on a mix of market forces and/or greed.

Ishiba may be right for some companies and some staff, that the company should be paying more and taking less profit, but for small businesses, the margins can already be too small. Whenever the wider economy is damaged or restricted (tariffs, sanctions, declining Yen), they won't have the cash to raise wages.

In larger companies, the gradient of the pay pyramid is the problem. The higher wage earners should be earning less and the lower wage earners (who do most of the work) should be earning more. But even implementing legal restrictions on high earners won't work, as they will simply cheat and bag the rest as perks or bonuses.

A higher minimum wage offers some benefit, but may drag more people down to it, or initiate staff cuts.

The only real solution is to empower workers by making it easier for them to switch jobs (finding a better employer), be self-employed and hold more than one job. I can't see them doing that as it would break some of the basic tenets of the Japanese workplace. So, nice ideas, but nothing will happen.

"In larger companies, the gradient of the pay pyramid is the problem."

A very, very observant, salient posting by JT poster 'GBR48'...

I went to my local AEON last night to purchase my chu-hi only to find that they had increased the price by about 10%. I was shocked since it was well past the normal October 1st date of price increases. The clerk was apologetic and said that she was surprised, too. I asked her if she had gotten a raise, for that might have made the price increase somewhat justifiable, but of course she hadn't. It isn't just the small companies, it's also the employees of the big companies that are being screwed.

Collge grads are making Y3 to Y4 mil a year in Japan... in the UK, USA, Australia, France, Germany and Canada they start a double to triple the starting salary of those in Japan. You talk to the average 40 to 50 year old salaryman in Japan and the say... Japan has become poor. The major reason Japan has become poor is the lack of wage growth for the last 35 years. The govt. does not want wages to grow and does not want inflation because half of retired people, and the numbers are large, will not be able to afford to live. The won't be able to live because they've all been screwed by the govt. pension system, and by financial institutions that manage retirement funds. The people of Japan are too docile, they won't fight for themselves because it is ingrained in their culture to stay quiet and endure... the perfect combination for the Govt. and Corporations to take advantage of them.

Minimum wage in my county is $16.00/hour. There are just as many fast food restaurants (way too many) as there were 5 years ago, likely more actually with new chains like Popeyes and Chick-Fil-A moving in.

The rise of wages in California actually will close all fast food chains.

And this could backfire on Ishiba as owners of such smaller businesses are seen as key supporters of his LDP.

Therein lies a big part of the problem. The LDP will always chicken out of tough decisions that alienate their small business backers.

Screwing over suppliers and/or employees has been the MO of Japan's famous and large-sized companies for decades. You wonder if they could really operate without it. While they, theoretically, can pay higher wages to their long-term employees, they claw it back from the suppliers and in terms of free labour from these employees or replace them with temps. Without real government intervention - making laws with teeth - it will always be the same. But, as ever and everywhere, the governments mostly take their orders from these companies, not the other way round.

If you can't pay you're workers a decent living wage then you are unfit to run a business.

Whatever they all say here, in the very most cases all the distributed money, like wages and wished wage hikes, requires quite some products or services to be designed, developed, produced and SOLD FOR MONEY BEFOREHAND. The other possibility would be to distribute beforehand with help of loans, but then it requires of course even a big lot more products and services to be sold afterwards which makes all the next wages small and much more improbable. So the choice is between taking now only a bit or nothing and later something, or now taking a lot and later only a bit or nothing for a long time. Politicians can only set some market conditions for selling or to export more globally, it's not their task and not in their power to set or demand wages against the market conditions and the market participants.

Of course it will. Companies will have to increase prices to cover the wage increase. Cutting taxes and dipping into the government’s coffer is the only way to ease the pain of the cost of living crisis.

Without government support of course it will, unless they are able to pass the cost increase on to their customers.

Ishiba doesn't know economy, he is just useless and reckless. For him the coming elections is more important than ordinary people's life. He doesn't understand it is premature to make such a wages hike will hurt his own countrymen!

I'm amazed 1500 yen by the mid-2030's. I know every country is different but Japan is in the G7 along with,

UK 2230 Yen per hour

France 1893 yen

Germany 2016 Yen

All three have 28-30 days of paid holiday

So where do all the profits from the world's biggest car producer, along with all the other global Japanese companies, go?

If you can't pay you're workers a decent living wage then you are unfit to run a business.

How many employees do you have in your business, John?

Government wants to raise everyone's incomes and keep tax brackets the same as they are. That means we all pay higher taxes despite no gains in buying power.

I'm perfectly happy to keep wages low. Get rid of the minimum wage. If someone is "unfit to run a business" their business will fail. Until then, let them pay employees whatever they agree upon.

Takayuki Okuyama, your answer is simple, just put the prices of your finished goods up to meet the required pay rises and company running costs, pay your staff well and retain them, if the company who buys your product moans at the price, tough, that what the costs are. they will have to pass on the rise in goods price onto the customer, unfortunately this cause inflation. but in this case inflation is good as the Japanese economy is stagnant, nothing is moving, wages art going up at the rate of inflation.

Fumio Kishida, pledged to achieve salary hikes that outpace rising prices, aiming to raise Japan's average minimum hourly wage to 1,500 yen by the mid-2030s.

In other words, in another 10 years. By then, the impact would be minimal.

I'm amazed 1500 yen by the mid-2030's. I know every country is different but Japan is in the G7 along with,

UK 2230 Yen per hour

France 1893 yen

Germany 2016 Yen

All three have 28-30 days of paid holiday

Excellent point John

Of course it will. Companies will have to increase prices to cover the wage increase. Cutting taxes and dipping into the government’s coffer is the only way to ease the pain of the cost of living crisis.

Exactly. Well said Lindsay. Just cut sales tax on food and other essential items as well as cut income tax, especially on people with kids. That would make a hell of a difference