Japan exporters keep check on pay rises

Japan’s leading exporters on Wednesday agreed to raise wages as part of the country’s annual spring salary negotiations but kept those increases in line with last year’s in a rebuff to both the government and unions.

Unions and politicians have complained that despite six years of record profitability at large exporters such as Toyota and Canon companies are not passing along their riches to company workers and therefore dampening domestic demand and consumption.

Companies such as Toyota, Honda and Toshiba agreed to pay rises for the third straight year despite the anticipated negative impact on their profits of a surging yen, which recently rose to an eight-year high of Y101.4 against the dollar.

But the wage increase at most companies remained below unions’ demands, due to the uncertain economic outlook in both the US and Japan. The umbrella electronics union had demanded a Y2,000 (£10, $20, €13)monthly wage increase, but leading companies such as Toshiba and Sharp agreed only to a Y1,000 increase.

“When we look at the overall environment, competition is still very fierce and we need to evaluate how that impacts our business,” said a Toshiba spokeswoman.

The sharp appreciation of the yen in recent months has already been felt at companies such as Sony, which generates more than 70 per cent of its sales overseas. A Y1 rise against the dollar takes Y6bn off operating profits and Sony recently said it would miss its promised operating profit target of five per cent in the year ending this month. Sony said on Wednesday that it was still in the process of negotiating wage increases with its union members.

In a rare rebuke to companies, Mr Fukuda used his weekly email last week to urge firms to increase wages. “I think now is the time when the fruits of reform should be passed on to the people and household budgets,” Mr Fukuda wrote, stressing that pay rises would “lead to much bigger profits for companies as the economy will expand as a whole if consumption increases through higher wages.”

Data released on Wednesday showed that consumer confidence across Japan sank to its lowest level in almost five years in February, according to the cabinet office. The index of confidence among households composed of two or more people came to an unadjusted 36.1, its lowest level since March 2003.