* More than 80 percent not looking to lift base wages
* Two thirds to raise bonuses but not base pay
* For most, overall compensation won't offset sales tax hike
* Companies cite need to keep fixed costs down
By James Topham
TOKYO, Feb 21 Fewer than one in five Japanese
companies plan to raise base wages in the coming business year,
a Reuters survey shows, a stark sign that Prime Minister Shinzo
Abe's stimulus policies are still struggling to gain traction.
Some big names, like Toyota Motor Corp, are
expected to raise base pay, but the bulk of companies in the
Reuters Corporate Survey say they will at most raise bonuses,
which can easily be reversed if the economic recovery lapses.
While bonuses account for an average 17 percent of a
Japanese worker's total compensation, the survey points to
diminished purchasing power for many workers.
Only 11 percent of firms said they plan to lift overall
remuneration - bonuses plus any rise in base pay - by enough to
cover a 3 percentage point rise in the national sales tax that
takes effect April 1.
Abenomics has spurred economic growth and sharp climbs in
corporate profits with bold monetary easing and government
spending, but economists argue that base pay hikes, along with
more capital spending, are key to transitioning to a
Since taking office in December 2012, Abe has publicly
pressured big business to raise wages. Workers at major
companies like Toyota, Hitachi Ltd, Nippon Steel &
Sumitomo Metal Corp are demanding higher base pay for
the year from April.
Toyota is likely to raise base pay for the first time in six
years, according to suppliers for the carmaker. Toyota officials
told reporters on Wednesday that nothing was decided as
negotiations are still underway.
But the survey, conducted Feb 3-17 for Reuters by Nikkei
Research, indicates such largesse remains the exception as
executives across a broad range of industries said they remain
leery of raising fixed costs amid an uncertain economic outlook.
"If we went ahead with a fixed increase in wages, we would
not be able to respond to fluctuations in business conditions,"
wrote one executive at a wholesaler in a typical response.
Of the 241 firms that replied to a question on their stance
on salary negotiations, 66 percent said they would lift bonuses
but not underlying compensation, while 16 percent plan no
increases at all. That represents a slightly more encouraging
stance than in September when 60 percent described their basic
stance as to lift bonuses but not base wages, while 24 percent
were not considering any pay increases.
Shintaro Okuno, a partner at consultants Bain & Co Japan,
who reviewed the results of the survey, said Japanese firms,
having developed a lean cost structure to cope when the yen was
high, were loathe to give that flexibility up.
"One of the few management (tactics) to counter instability
of the future is to keep your fixed costs as lean as possible,"
The results come just as worries mount that the Abenomics
boost is fading. Japan's economy, after leading the Group of
Seven powers in the first half of 2013, skidded to annual growth
of 1 percent in the second half, hurt by weakness in exports,
private consumption and capital spending.
Sentiment at Japanese manufacturers slipped in February for
the first time in five months and is seen sliding further, the
Reuters Tankan survey, taken alongside the corporate survey,
Concerns mentioned by executives in the comment sections of
the corporate survey, included the impact of the sales tax hike
on consumer sentiment, increased competition as well as rises in
The poll also showed deep-seated scepticism that the Bank of
Japan can meet its goal of lifting the world's third-biggest
economy out of 15 years of deflation by next year.
Given the headwinds, just 15 percent of respondents think
prices will increase by 2 percent or more in a year from now,
after stripping out the effect of the sales tax hike. Including
the tax increase, however, 69 percent expect inflation to meet
or beat the target.
The Reuters Corporate Survey polls upper management at 400
companies each capitalised at more than 1 billion yen. The
firms, split evenly between manufacturers and non-manufacturers,
(Additional reporting by Tetsushi Kajimoto; Editing by William
Mallard and Edwina Gibbs)