Is Abenomics working with regard to wages? Um, not
so much when it comes to “core” wages. The following are a couple of memos that
I whipped up for a friend/journalist.
“First of all, most of the reported base-rate hikes
(other than the whopping, across-the-board 10,000 yen hike at Gyoza no Ohsho
being the one exception—in the non-manufacturing sector to boot--that I’ve
noticed) do not match the 2% inflation target that the Kuroda BOJ is shooting
for. Since BOJ only needs to hit the 2% figure y-on-y after two years, let’s
say that the base rate hikes should only have to match up to mid-year inflation
rate of 1% (which is actually a reasonable concession since the Japanese “core”
CPI is not really “core” by international standards.). Even then, only a small
fraction of the companies being mentioned appear to be measuring up to that
more modest if reasonable yardstick. And we haven’t even talked about the 3%
VAT rate hike yet.
“So here’s the deal: If you’re a regular employee at
a large, publicly-listed corporation that is not on the skids, your living
standards have been protected by the deflationary environment. But here comes
sustainable core inflation (hopes Abe) and the extra 3% and only some of all
that is compensated at the salary base-rate level, the remainder being
accounted for by the annual bonuses, which can be reeled back whenever the
corporate balance sheets so demand. And of course, there’s always the annual
scale-based raise, which has masked at the individual level the lack of base-rate
hikes at the collective.
“But what about services? Construction (which in
Japan counts as services)? Okay, construction employees are likely to get their
dues, regular or irregular. But the others? Small businesses? Irregular
workers?
“Looks uncertain at this point to me. But let’s say
consumption is on the rise, employment is on the rise, although the bulk of the
new employment will be in the form of irregular workers (analogous to bonuses
with regard to compensation), creating the appearance of growing income
disparities—hello, minimum wage is better than no wage if you need the money—so
hopefully, consumption follows the May, post-VAT hike, dead-cat’s-bounce with a
steady rise, on a lower trajectory but with a similar vector. Unless you
absolutely hate Abe’s values agenda and want the economy to tank.
“But what do I know, I’m an arithmetist, not an
economist. Thank you for the interruption; now, back to work.”
..and
“I've always believed
that the unions are in cahoots with management. Corporate union leaders
typically serves a few years, then goes back to work, having garnered
invaluable experience and relationships with regard to labor relations. Or so
it used to be at any big businesses when I was young. Please confirm with real
experts, but there are inferences to be made about the numbers from this point.”
