Monday, November 13, 2017

No Wage Rise for the Japanese Workers

Japanese companies are warming to mobilizing their mountains of accumulated cash for mergers and acquisitions but remain stubbornly resistant to wage increases, a Reuters poll showed.

Abe’s government has struggled for years to coax companies to lift wages, seen as the missing link for a sustainable growth cycle led by consumer spending. But deep-seated doubts stirred in part by Japan’s shrinking population have left them loath to take on higher fixed costs. Instead, they have hoarded their cash or, increasingly, begun looking to overseas acquisitions as a way to escape the limitations in their home markets.

Asked how they intended to use their internal reserves in the future, 23 percent of companies in the survey said for mergers and acquisitions, versus only 4 percent that said wage increases.

One-third of companies plan to spend reserves on domestic capital investment while 13 percent aim to invest overseas. Another 20 percent said they would hold onto their cash.

“We want to avoid having too little in reserve, so we won’t spend any of it no matter what we are told to do,” wrote an official at a precision machinery manufacturer.

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