We can see some positive signs from Japan. The government, companies and the unions all want to contribute to putting the economy on a positive growth cycle in Japan.
According to The Australia Financial Review today, Japanese Prime Minister Shinzo Abe's aggressive pressure on the corporate sector has produced the most substantial results so far, as some of Japan's most prominent companies announced their biggest pay increases in years. They include Toyota and other giants from the car-making industry, as well as electronics makers such as Panasonic and Hitachi.
Toyota agreed to lift baseline pay for its full-time Japanese workers by ¥4000 ($43) a month, the most in 13 years. Added to regular increases linked to seniority, the average Toyota employee's monthly pay will rise 3.2 per cent, the company said, significantly above the rate of inflation.
Other large companies announced similar increases in base monthly pay. Nissan agreed to a ¥5000 yen raise. Honda is lifting base pay by ¥3400. A group of six prominent electronics makers, including Panasonic, Hitachi and Toshiba, announced raises of ¥3000.
Economists say pay at companies such as Toyota has long served a benchmark for other businesses. So more of Japan's large companies are likely to follow in the coming weeks.
The country is only just recovering from that unexpected downturn. And a pick-up in consumer prices – trumpeted by the government as a sign of renewed economic vigour – has stalled. Without greater increases in pay, Mr Abe and his advisers fear that an already fraying campaign to stimulate growth, known as Abenomics, could disintegrate completely.
Still, both business and labour (union) groups expressed satisfaction with the outcome, saying they hoped that the pay increases would provide the economy some much-needed momentum.
Subscribe to our English Newsletter