TOKYO • Most major Japanese companies yesterday offered the lowest hikes in base pay for staff in four years, a setback for Prime Minister Shinzo Abe's campaign, dubbed "Abenomics", to spur the country's long-sluggish economy.
Japan's annual spring wage increases, also known as shunto, are a barometer of corporate confidence and an indicator of whether consumer spending can get a needed boost.
"Wage growth is far from enough to accelerate economic growth and inflation," said Japan Research Institute economist Hisashi Yamada.
Toyota Motor's base pay hike, traditionally a benchmark other companies use to gauge their increases, came to 1,300 yen (S$16) a month - below last year's 1,500 yen. The new hike is less than half the union's demand and far below the 4,000 yen given in 2015.
For a Toyota mid-level technician earning 360,000 yen a month, the pay increase works out to 0.36 per cent. It can buy one bowl of rice, with pork cutlet with miso sauce on top.
Despite sitting on piles of cash, Japanese firms are reluctant to raise wages as they are anxious about the economic outlook, currency swings and the chance that United States President Donald Trump's trade policies will hurt export sales.
Major electric machinery makers, such as Mitsubishi Electric and Panasonic, like Toyota, lowered their wage hikes for a second year. They are giving 1,000 yen, down from 1,500 yen last year and 3,0000 yen the previous year.
Mr Yamada and other analysts say that major companies are increasing base pay by about 0.3 per cent on average for the fiscal year starting in April, the smallest amount in four years.
From the early 2000s, base pay raises were virtually frozen, until Mr Abe came to power in late 2012, with a pledge to reboot the moribund economy. He urged companies to lift wages and they complied, to a degree.