BoJ Could Soon End Ultra Accommodative Monetary Policy As Wage Negotiations Conclude
- Pay packets set for the biggest increase since 1997
- Small companies’ wage decisions seen most impactful
- Outcome expected to steer BoJ’s monetary policy
- Data due Wednesday, 15 March
By Selin Gücüm
LiveSquawk News
14 March 2023 | 12:00 GMT
Japanese firms’ wage negotiations, known locally as the "shunto", are expected to result in the biggest round of salary hikes since 1997 with analysts predicting increases at or above 3%.
While Prime Minister Kishida has insisted on a hike of 3%, 18 unions under the collective UA Zensen body, are wrangling for an average wage increase of 5.28% with employers.
The vice chair of the Japan Research Institute noted that “Wage increases are gaining momentum across the board.” Along with inflation and labour shortages.
Unconventionally, Prime Minister Kishida is scheduled to hold a meeting with business and union officials on 15 March, the day of negotiation results.
Analysts anticipate big firms like Uniqlo and Toyota will propose wage hikes of 3% at negotiations, resulting in the largest rise in 25 years. This expected hike will come after last year’s 2.2% increase, the first rise in four years.
However, analysts highlight that it is the salary decisions of smaller companies without unions that will be crucial in how widespread wage gains are. Smaller firms, with less than 1,000 workers employ 76% of the Japanese workforce, among them big manufacturers.
Therefore, the Bank of Japan is likely to be more focused on those small-scale businesses. The result of the wage negotiations could weigh heavily on BoJ policymakers and the incoming governor Kazuo Ueda’s decision on when to end the country’s ultra-low interest rates regime and begin normalisation.
Japan has maintained an ultra-loose monetary policy for well over two decades. Experts say that steady wage growth is pivotal to revitalising domestic demand and keeping inflation around its 2% target.
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- Pay packets set for the biggest increase since 1997
- Small companies’ wage decisions seen most impactful
- Outcome expected to steer BoJ’s monetary policy
- Data due Wednesday, 15 March
By Selin Gücüm
LiveSquawk News
14 March 2023 | 12:00 GMT
Japanese firms’ wage negotiations, known locally as the "shunto", are expected to result in the biggest round of salary hikes since 1997 with analysts predicting increases at or above 3%.
While Prime Minister Kishida has insisted on a hike of 3%, 18 unions under the collective UA Zensen body, are wrangling for an average wage increase of 5.28% with employers.
The vice chair of the Japan Research Institute noted that “Wage increases are gaining momentum across the board.” Along with inflation and labour shortages.
Unconventionally, Prime Minister Kishida is scheduled to hold a meeting with business and union officials on 15 March, the day of negotiation results.
Analysts anticipate big firms like Uniqlo and Toyota will propose wage hikes of 3% at negotiations, resulting in the largest rise in 25 years. This expected hike will come after last year’s 2.2% increase, the first rise in four years.
However, analysts highlight that it is the salary decisions of smaller companies without unions that will be crucial in how widespread wage gains are. Smaller firms, with less than 1,000 workers employ 76% of the Japanese workforce, among them big manufacturers.
Therefore, the Bank of Japan is likely to be more focused on those small-scale businesses. The result of the wage negotiations could weigh heavily on BoJ policymakers and the incoming governor Kazuo Ueda’s decision on when to end the country’s ultra-low interest rates regime and begin normalisation.
Japan has maintained an ultra-loose monetary policy for well over two decades. Experts say that steady wage growth is pivotal to revitalising domestic demand and keeping inflation around its 2% target.