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Major firms offer smaller pay-scale hike amid global economy woes

Akira Takakura, center, head of the Japan Council of Metalworkers' Unions, briefs reporters on the result of negotiations with management on a pay-scale hike, in Tokyo, on March 13, 2019. (Kyodo)

TOKYO (Kyodo) -- Most major Japanese companies offered on Wednesday a smaller pay-scale hike than last year amid uncertainty over the global economy, in a move that may weaken household spending even before the government raises the consumption tax this year.

Prime Minister Shinzo Abe urged companies to raise wages for the sixth straight year during this spring's annual management-labor negotiations but refrained from mentioning an explicit figure, in contrast to his call for a 3 percent rise last year to pull the country out of deflation.

Amid global economic risks such as China's slowdown, the companies were reluctant about pay-scale hikes, which would increase fixed costs, instead offering to improve labor conditions through such measures as enhancing benefits for working parents, as requested by the Japan Business Federation, the country's most powerful business lobby.

Toyota Motor Corp., a trendsetter for the annual wage talks, offered a raise of an average 10,700 yen ($96) a month per employee, including hikes in regular wages based on a worker's age or length of employment as well as base pay, down 1,000 yen from the year before and also lower than the raise of 12,000 yen sought by its union.

Toyota's union had not presented a specific target for a hike in base pay, focusing rather on securing an overall improvement in benefits for employees. The company did not release figures for base pay.

Honda Motor Co. offered a base pay rise of 1,400 yen, down 300 yen from the previous year, while Subaru Corp., hit by a series of scandals over quality control misconduct, presented an increase of 1,000 yen compared with 1,300 yen the previous year.

Nissan Motor Co., meanwhile, offered a hike of 3,000 yen, the same as last year and meeting the union's request, apparently to boost employee morale after the company was rocked by the arrest of former Chairman Carlos Ghosn in November.

Major electronics companies including Hitachi Ltd. and Panasonic Corp. have struck a deal to raise wage scales by 1,000 yen per month, down 500 yen from the previous year.

Many Japanese electronics and auto manufacturers have cut their earnings outlooks for the fiscal year ending this month and are trying to cut costs amid fears of slower exports and other negative fallout from the prolonged trade conflict between the United States and China, and growing uncertainty over Britain's planned exit from the European Union.

Automakers face the need to boost investments as the industry rapidly shifts to electrification and automation of vehicles, making them cautious about raising wages, analysts said.

The tepid wage hikes fueled concerns about Japan's economic prospects that have been already dimmed by the planned consumption tax hike in October to 10 percent from the current 8 percent.

The government has devised a set of stimulus steps to underpin private consumption, which accounts for more than half of Japan's economic output. But some data have pointed to a possible downtrend.

Last week, the government lowered its assessment of a key indicator of economic trends for January, suggesting Japan may have already entered a recessionary phase.

The assessment, based on factors such as slower industrial output amid falling exports to China, casts doubt over the earlier assertion by the government that Japan's economy is experiencing its longest growth streak since the end of World War II.

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