Japanese exporters will hand out bigger bonuses for the next fiscal year as Prime Minister Shinzo Abe’s policies drive the yen to multiyear lows, with Toyota Motor Corp. declaring its largest bonus payout since the global financial crisis.
However, major companies including Toyota and Panasonic Corp. kept base salaries unchanged in the year ending March 2014.
Since taking power in December, Abe has been prescribing a mix of fiscal and monetary measures with an aim of lifting the economy out of two decades of deflation. The prime minister has also called for higher wages, seen crucial to boosting household expenditure, consumer prices and ultimately corporate earnings.
“The bonus increase will have less effect on boosting private spending than a rise in base salary because people tend to save such temporary increases,” said Yasuo Yamamoto, a senior economist at Mizuho Research Institute in Tokyo.
“It is the beginning towards a full-fledged recovery in private spending. But the economy needs to continue recovering to achieve that.”
Abe’s policy stimulus has so far pushed the yen to 3-1/2 year lows against the dollar, supporting exporters including auto makers. Exports account for around 16 per cent of the Japanese economy, the third-largest in the world.
Citing improving global economic conditions and stimulus at home, the Japanese government has forecast the economy would grow 2.5 per cent in real terms in the next fiscal year, up from 1.0 per cent this year.
Data on Tuesday showed Japanese consumer confidence hit its highest in February since mid-2007.
For the year ending March 2014, Toyota plans to increase bonuses by about ¥270,000 ($2,805 U.S. ) on average from a year earlier.
In February, Toyota lifted its annual net profit guidance for the year to March by more than 10 per cent and said it expects its Japanese manufacturing business to be back in the black for the first time in five years.
Toyota, Japan’s biggest auto maker, decided not to raise base wages. The union did not ask for a wage increase because while the yen has dropped in the recent months, it still remains strong compared with five years ago.
The last time Toyota, which employs about 69,000 people in Japan, gave a base pay rise was five years ago, according to the Confederation of Japan Automobile Workers’ Unions.
Nissan Motor Co., Honda Motor Co. and Fuji Heavy Industries also decided to raise bonuses while keeping wages unchanged.
The scale of bonuses as announced by companies in Japan on Wednesday vary. Hitachi Ltd. said it will raise its bonus payment by about ¥160,000 on average.
For many other electronics makers including Panasonic, which employs 128,000 staff in Japan, bonuses will depend on business results. They also kept wages unchanged.
An exception was retailer Seven & I Holdings Co. the owner of the 7-11 convenience store chain, which said this month it will increase base pay for about 53,500 employees.
The results of the annual wage negotiations between labour unions and companies confirmed a recent Reuters poll that showed a majority of Japanese firms were reluctant to play along with Abe’s calls to raise wages.
After the collapse of the bubble economy in the 1980s, many Japanese companies cut salaries to keep workers on the payroll instead of mass layoffs, and that trend has stuck.
Average wages, closely correlated with consumer prices, have been declining since 1998, data from the National Tax Agency show. Last year, the average monthly income for Japanese wage earners stood at ¥314,236 ($3,300), the lowest since comparable data became available in 1990.