Jesper, you make some good points but I can't agree with your premise that a failure to address meaningful labour market reform is a good thing. I would argue that lack of labour mobility is a key reason Japanese companies have been so slow to start raising wages notwithstanding much improved profitability and a tight labour market. Why pay more when there is little risk of people changing jobs (for full-time employees)? The rigid labour market continues to be an impediment to more efficient use of both labour and associated operating assets. The gains we have seen in Japan have been in spite of rather than because of the failure to reform and hinders Japan's long-term prosperity. Japan's creditor status has grown but Japanese relative incomes have continued to slide. Cheers, Dean
Dean, heya -- yes, Japan is the champion of stock-building and hoarding ; as you know well labor mobility is dramatically different between listed versus non-listed companies ; and your point on management incentives is deeply rooted in Japan's history: if my memory serves well, "life-time employment system" was set up during the late Meiji era by the Zaibatsu forming an informal 'cartel', precisely to stop to rampant up-bidding and poaching of skill as labor was in tight supply ; more soon ; hope to see you in Tokyo ; many cheers ;-j
Interesting perspective, as always. That said, regarding 2) Fast Retailing (Uniqlo) is hardly representative of Japan, Inc's position on increasing base pay this year. While it's good to have a company like this that leads from the front, most businesses are not planning any increase or, if they are, only a very small, incremental increase at a rate lower than inflation. Also, about 3), there seems to be an ever widening gap between wealth distribution in urban and rural areas, despite the ongoing reliance on pork barrel projects in the countryside. Any reaction?
thank you, mark - yes, Yanai-san firing the starting shot is indeed 'leading from the top' ; I expect average base pay increases to come to around 2.5-3% ; and your focus on internal income and wealth gaps is well taken ; redistributing back from the Edo/Tokyo center has been a primary occupation for the government ; more on that soon ; many cheers ;-j
It's also worth noting why Fast Retailing is increasing its wages: "in an effort to narrow the remuneration gap with its employees overseas" (Mainichi). Japanese employees make up about 15 percent of the group's total employees. Not many Japanese companies have such a weighting towards operations overseas and will feel obliged to raise wages in Japan to keep them competitive. How many full time employees does an average Uniqlo store have? When I've been into my local recently, all the cash registers have been converted to self-register, leaving just a few employees (probably part-timers) stacking shelves etc. (But a good example of rising productivity due to increased employment costs - part timers wages were raised by 20 percent earlier this year I believe)
That's a good point. During the winter holidays during a visit to our local Uniqlo I noticed the same thing at the check-out. At the end of the day, Uniqlo's decision to increase wages is, in fact, a good one. Perhaps it will be held up as a model for others to replicate in Japan.
Jesper, you make some good points but I can't agree with your premise that a failure to address meaningful labour market reform is a good thing. I would argue that lack of labour mobility is a key reason Japanese companies have been so slow to start raising wages notwithstanding much improved profitability and a tight labour market. Why pay more when there is little risk of people changing jobs (for full-time employees)? The rigid labour market continues to be an impediment to more efficient use of both labour and associated operating assets. The gains we have seen in Japan have been in spite of rather than because of the failure to reform and hinders Japan's long-term prosperity. Japan's creditor status has grown but Japanese relative incomes have continued to slide. Cheers, Dean
Dean, heya -- yes, Japan is the champion of stock-building and hoarding ; as you know well labor mobility is dramatically different between listed versus non-listed companies ; and your point on management incentives is deeply rooted in Japan's history: if my memory serves well, "life-time employment system" was set up during the late Meiji era by the Zaibatsu forming an informal 'cartel', precisely to stop to rampant up-bidding and poaching of skill as labor was in tight supply ; more soon ; hope to see you in Tokyo ; many cheers ;-j
Interesting perspective, as always. That said, regarding 2) Fast Retailing (Uniqlo) is hardly representative of Japan, Inc's position on increasing base pay this year. While it's good to have a company like this that leads from the front, most businesses are not planning any increase or, if they are, only a very small, incremental increase at a rate lower than inflation. Also, about 3), there seems to be an ever widening gap between wealth distribution in urban and rural areas, despite the ongoing reliance on pork barrel projects in the countryside. Any reaction?
thank you, mark - yes, Yanai-san firing the starting shot is indeed 'leading from the top' ; I expect average base pay increases to come to around 2.5-3% ; and your focus on internal income and wealth gaps is well taken ; redistributing back from the Edo/Tokyo center has been a primary occupation for the government ; more on that soon ; many cheers ;-j
It's also worth noting why Fast Retailing is increasing its wages: "in an effort to narrow the remuneration gap with its employees overseas" (Mainichi). Japanese employees make up about 15 percent of the group's total employees. Not many Japanese companies have such a weighting towards operations overseas and will feel obliged to raise wages in Japan to keep them competitive. How many full time employees does an average Uniqlo store have? When I've been into my local recently, all the cash registers have been converted to self-register, leaving just a few employees (probably part-timers) stacking shelves etc. (But a good example of rising productivity due to increased employment costs - part timers wages were raised by 20 percent earlier this year I believe)
That's a good point. During the winter holidays during a visit to our local Uniqlo I noticed the same thing at the check-out. At the end of the day, Uniqlo's decision to increase wages is, in fact, a good one. Perhaps it will be held up as a model for others to replicate in Japan.