Abenomics Is Crushing The Japanese Worker
It seems the hopes and dreams of a Japanese public (and their illustrious leaders) is being dashed on the same rocks as the US worker. Amid surging input prices (thanks to a devalued currency) with consumer prices rising at the fastest rate since 2008, Bloomberg notes that Japanese salaries extended the longest slide since 2010 squeezing the consumer as the failure of demand pull inflation becomes more than real. Despite a stock market that is surging and politicians the world over proclaiming Japan's victory, "companies aren't confident enough on the sustainability of the economic recovery," instead cutting salaries (in an oh-so-American manner) to manage higher input costs. With a sales-tax increase on its way, the consumer faces even more pressure, "if wages don't improve much, it may pose a political risk" to Abe's administration.
Japan salaries extended the longest slide since 2010 in July, raising the stakes for Prime Minister Shinzo Abe’s decision on whether to increase a sales tax.
Regular wages excluding overtime and bonuses dropped 0.4 percent from a year earlier, marking a 14th straight month of decline, according to data released today by the Ministry of Health, Labour and Welfare.
With salaries sliding and consumer prices rising in July at the fastest pace since 2008 on higher energy costs, a sales-tax increase could squeeze households, threatening the success of the policies dubbed Abenomics.
“Companies aren’t confident enough on the sustainability of the economic recovery,” said Yoshimasa Maruyama, chief economist at Itochu Corp. in Tokyo. “If wages don’t improve much, it may pose a political risk” to Abe’s administration, he said.
Companies won’t increase workers’ basic salaries unless they are confident in the future, Amari said.
“We will make an environment in which they will have enough confidence” to raise wages, Amari said.