In the canteen at Nomura Holdings Inc.’s Tokyo headquarters, prices are rising faster than the wages the brokerage pays its staff.
A regular coffee now costs 190 yen ($1.53), a 19 percent increase from March, said an employee who asked not to be named because he’s not authorized to talk to the media. A latte has risen 14 percent to 240 yen, another worker said. The average salary including bonuses at Nomura’s brokerage in Japan climbed 6.7 percent in the year ended March.
With pay more than three times the national average, employees at the nation’s largest securities firm are better equipped than most to shell out more for their espressos. Yet the situation at Nomura, one of the cheerleaders of Prime Minister Shinzo Abe’s plans to spur inflation, reflects a broader reality of the premier’s efforts: the need to hand over more at the till while waiting for wages to catch up.
“People just want things to get better faster,” said Nicholas Smith, a strategist at CLSA Ltd. in Tokyo. “It’s less a case that things are bad, because they’re not.”
Food and drink is costing more at convenience stores, supermarkets and restaurants across Japan. In January, Nissin Foods Holdings Co. raised the price of its cup noodles. Nippon Flour Mills Co. did the same for pasta and flour last month after wheat import costs rose.
With all its nuclear plants shuttered, Japan must import more energy and pay for it with a weaker yen. As this weighs on the cost of living, wages adjusted for inflation fell to the lowest since at least 1990.
A record 62 percent of Japanese households described their living conditions as “hard” last year in a survey on incomes, after the government raised a levy on consumption for the first time since 1997.
Relative to median pay, Japan’s minimum wage is lower than many other countries, including the U.S. and Germany. It should be increased by 18 yen an hour to 798 yen, according to a Ministry of Health, Labor and Welfare panel recommendation.
“Even though wages have increased, prices have risen more because of higher import costs and the sales tax,” said Yoshihiro Ito, chief strategist at Okasan Online Securities Co. “There’s concern salaries won’t continue to rise.”
Nomura Securities’ average pay including bonuses for the company’s 12,928 employees in Japan in the year ended March was 11.9 million yen, up 6.7 percent from the previous 12 months. That compares with a national average of 3.77 million yen. As well as boosting prices, Abe’s policies have buoyed the stock market, driving Nomura’s annual profit to a nine-year high.
One employee, who asked not to be identified, said people in his group haven’t had a raise in years and the higher prices are causing some complaints. Nomura spokesman Kenji Yamashita declined to comment on specific wages.
The canteen is operated by Aim Services Co., Yamashita said, declining to say if Nomura subsidizes it. A spokesman for Aim Services declined to comment.
“Even if you’re well-paid, workers in the prime of their careers have a lot of expenses to deal with, from raising children to paying mortgages,” Okasan’s Ito said. “Consumers still prefer to buy cheap things. If you go to a home center, you can see layers of dust covering anything expensive.”
The BOJ forecasts 0.7 percent inflation for the fiscal year through March 2016 and expects to reach its goal of 2 percent around the six months through September 2016. The bank’s preferred inflation gauge climbed 0.1 percent in June, while food prices rose 2.5 percent.
Nomura Chief Executive Officer Koji Nagai’s pay exceeded 300 million yen for the first time last year. Profit surged to a nine-year high as Japan’s stock-market rally spurred brokerage commissions and asset-management fees, while shares have almost doubled since Abe came to power. The stock fell 0.7 percent in Tokyo on Tuesday.
The brokerage said in January it would raise base pay for about 3,700 employees by 2.3 percent on average from April to retain younger staff and support the economy. The increase is aimed at employees who are mainly in their 20s, Nomura spokesman Yamashita said at the time.
“Abenomics is about microeconomics mostly, and about restructuring the economy,” CLSA’s Smith said. “It takes a lot of years for supply-side reforms to filter through into the economy. It isn’t a case of throwing the gasoline onto the fire in one go.”