BOJ branch managers hint at divergence on higher wages between smaller and bigger firms

Here are some comments from the BOJ branch managers for Osaka and Nagoya:

  • Many firms in Kansai region have yet to reach decision of wages (Osaka)
  • Some big firms appear keen about wage hikes, though there is divergence among smaller firms (Osaka)
  • Many firms aware of the need to compensate employees with higher wages (Osaka)
  • However, no clarity on whether they are able to pass on higher labour costs through price hikes (Osaka)
  • Momentum for wage hikes is heightening (Nagoya)
  • But some small firms say they find it difficult to increase pay (Nagoya)
  • There is uncertainty on the outlook for wages (Nagoya)

As we get closer to the spring wage negotiations in March and April this year, there will be a lot of scrutiny on the above developments. Trade unions are likely to be able to push for higher wage hikes, as they are backed by the government. But for smaller firms, it may be a tall order especially amid higher price pressures in general – not to mention a weaker domestic currency for importers.

This article was written by Justin Low at Source