Japan business lobby head won't commit to higher wages

Look, Abe, if you want it to happen, you'll have to MAKE them. They're not going to do it voluntarily,

Are there any profitable companies in Japan?

Are there any profitable companies in Japan?

I have two.

If I can procure a hamburger for 500 yen versus a hamburger for 550 yen, does the government demand that I opt for the more expensive / less economically rational one in order to contribute to Abe's virtuous economic cycle of rising prices and rising wages?

Of course not. That would be utterly stupid and ridiculous. I buy the cheaper hamburger, if the quality of the two is to my mind equivalent.

Why isn't the same regarded of these calls for companies to hike wages?

Companies should hike wages when they need to in order to retain their valuable staff. If their staff have no place better to offer their labour, why should Abe demand they get a wage hike? Are they more productive just because Abe says wages should go up?

Of course they won't. One key way to derive profit (and this is a capitalist's raison d'être) is to exploit workers by claiming surplus value, so why would the corporate and investing class want to go against the very logic of a system that provides them greater wealth and power, even when this behaviour harms the society from which and in which they benefit. This is why Adam Smith and other political economists have argued that capital and capitalists must be closely regulated. The problem is that so often our political and government representatives are rather "encouraged" to represent the self-interests of the very people and groups that they should be regulating.

However, around 65% of people work at small and medium-sized enterprises, many of which are losing money and are therefore unlikely to raise salaries or spend extra money on training employees.

I hope that those here who have been preaching that wages have gone up take a hard look at the facts. Big businesses are making money, but it's the middle sized and small sized companies that provide the backbone to the economy that need help.

Abe should be assisting them.

If I can procure a hamburger for 500 yen versus a hamburger for 550 yen, does the government demand that I opt for the more expensive / less economically rational one in order to contribute to Abe's virtuous economic cycle of rising prices and rising wages? Of course not. That would be utterly stupid and ridiculous. I buy the cheaper hamburger, if the quality of the two is to my mind equivalent.

But Japan is the country where people would rather pay 1000 yen for a hamburger that only 10 people will buy. Personally I would rather have 100 people eating my 500 yen hamburgers!

If Abe had his way everyone would be buying the 1000 hamburger and wrapping it in a flag of being patriotic!

PM Abe cannot force them to raise wages because these business lobbies are the socle of Japanese economy. They operate the governments and make the laws. Foolish are those who believe in the power of a government in a capitalistic state.

Abe should reverse the cut in corporation tax and use the proceeds to cut payroll taxes.

Sorry, but of course they won'r raise wages. With Japan's economy already uncompetitive with other countries in the area, and a stock market pumped up by easy money printed out by the central bank, and government debt getting ready to surpass the entire amount of cash deposits held in Japanese financial institutions, the business lobby is right to be skeptical.

Then we add the fact that the population continues it's steep descent, and that most Japanese companies depend on domestic consumption. And of course we have to consider that though the large companies have earned strong profits, most of these companies are carrying debts which they must pay off. For example, it would take nearly 20 years of profits such as Panasonic posted last year to pay for the losses they incurred over the previous 5 years.

Lastly, the business lobby is made up almost entirely of large companies, which make up a small part of the economy. Even if they did raise wages, any positive effect would be to small to move the rest of the economy. Last year 70% of Japanese companies reported a loss, that is they earned no profit. Most of these businesses are mom-and-pop businesses which employ more than half of the people in Japan. How is Abe going to convince them to raise wages?

The larger companies are doing what they should be doing considering the current toxic business environment in Japan, they are putting their money and wages elsewhere. It is not businesses which have to make changes, it is the government. If the government wants businesses to grow, increase pay, and, in the end, pay more taxes, it is going to have to create an environment where such things are possible. Right now they aren't.

The head of an influential Japanese business lobby said Monday it won’t pass on the government’s requests to its members to raise salaries next year,

Nor should they. As the article states, 65% of the J-companies are small, domestically-oriented ones, who have not seen an increase in domestic comsumption cannot afford to raise wages. While the large, export-oriented ones, do not want to increase their fixed costs even more, while trying to compete with the likes of the U.S., China, and SK. in a global economy.

There is no substitute for broad, sustained economic growth which leads to higher wages. It is just insane for politicians to ask companies to pay more if the natural economic conditions are not present.

Are there any profitable companies in Japan?

KoiwaiC,

Sadly as Sangetsu said 70% of J-companies don't pay taxes, BUT this is nothing new, its been this way for decades!

The companies are set up so they don't make much if any $$$, so most of these companies are very weak in many ways which is why Japan has fought like dogs to keep the world OUT of Japan, luckily or sadly now most overseas business have little or less & less interest in Japan so Japan has ""won"" or so they think, clearly Japan is in steep decline & does its little to no favours in this regard.

Its pretty bad when little ole me pays more tax than 70% of J-companies, BUT their employees PAY & that's all the govt cares about, ie sticking it to the little guy/gals the people on the street

I don't expect any real changes in all this

Small and medium sized companies are losing money largely because they are at the mercy of the companies whose CEOs belong to the Kezai Doyukai. They are being squeezed by major corporations who set the prices they will pay for goods, and deny these same businesses the ability to produce for competitors. Vertical integration hierarchies of this type exist throughout the Japanese manufacturing industry - the smaller the company, the smaller the profits, and the greater the instability. It's essentially a form of keiretsu, but with "independent" subsidiaries.

If anything needs to be raised, it is the minimum wage. Other countries manage no problem with their good minimum wages, and you never hear about them moaning about the price of a hamburger. The only people who complain about an increase in minimum wages are people who are already on a good wage. Let's see how they would survive in Japan on Yen 120,000 a month.

25years,

Other countries manage no problem with their good minimum wages

Do they have higher levels of unemployment among low skilled workers than Japan?

The only people who complain about an increase in minimum wages are people who are already on a good wage.

Unfair. The odd Nobel prize winner has complained about it as well.

Let's see how they would survive in Japan on Yen 120,000 a month.

How would low skilled workers survive in Japan on no income whatsoever, if the government makes it illegal to employ them at a wage level commensurate to what they initially have to offer?

My first job was low-skilled work. But it didn't kill me, and I was happy for the money. Happier than I'd have been to not have the work at all.

How would low skilled workers survive in Japan on no income whatsoever, if the government makes it illegal to employ them at a wage level commensurate to what they initially have to offer?

This is a logical fallacy. If companies need the workers, they will employ them. They aren't going to not hire someone they need, because they think the person is only worth 750 yen/hr, but they have to pay them 1000/hr, they'll pay the 1000/hr because they need them.

koiwaicoffee. I have exactly same question as you're. The big Companies did not change the way they have operating and doing business strategy while their business was losing money for decade. They are waiting for good old times but they should know old good times will never come back. Only a few of Japanese Companies are changing their marketing and operating strategy. Toyota Company is one of a few Companies successfully adapting to modern business format. Company like Toshiba and Sony need new leadership and reform operating strategy.

I don't think employers will afford to pay higher wages at current Japanese economy situation.