Pay Rises Remain Elusive at Japan's Biggest Banks in Blow to AbeBy
MUFG and Mizuho’s unions won’t ask for increase in base wages
Workers at Sumitomo Mitsui are seeking $27-a-month raise
Prime Minister Shinzo Abe’s goal of reflating the Japanese economy has been dealt a setback as pay rises remain off the table at two of the nation’s biggest banks for a second straight year.
Labor unions at Bank of Tokyo-Mitsubishi UFJ Ltd. and Mizuho Financial Group Inc. don’t intend to ask for an increase in base wages for the year starting April, according to people with knowledge of the matter. Mizuho’s union reached the decision after taking into account the pressure on banks’ profits from factors including negative interest rates, according to one of the people.
The so-called Shunto annual wage talks between companies and their labor unions each spring are watched closely because wage rises are seen as crucial for ending decades of falling prices that are hampering the economy’s revival. Japanese banks are finding it harder to earn money from lending after the central bank introduced negative rates last year -- ironically to help end deflation.
“In reality, companies that are able to raise wages should keep doing so,” said Yasuhide Yajima, chief economist at NLI Research Institute in Tokyo. “The banks have probably taken a cautious approach,’’ he said, given the severe profit situation and the risk that the central bank could still further ease monetary policy if the yen resumes strengthening.
Abe is counting on higher salaries to spur consumer spending, which would in turn boost prices and corporate profits that can be shared with workers. Yet many Japanese companies remain reluctant to contribute to this so-called virtuous cycle even as jobs become more plentiful. The ratio of jobs to applicants is the highest in a quarter century.
The labor union at Sumitomo Mitsui Banking Corp., the other of Japan’s three megabanks, will ask management for a 0.5 percent increase in base salary, according to a person familiar with the matter. That works out to about 3,000 yen ($27) a month for the average full-time employee, the person said.
“Maintaining the momentum of wage increases is extremely important to strengthen the positive economic cycle toward overcoming deflation in Japan,” Chief Executive Officer Takeshi Kunibe told reporters last month. The bank’s union expects the request will be accepted by management, given Kunibe’s comments, the person said.
Kyodo News reported the bank unions’ plans earlier.
Sumitomo Mitsui and its rivals employ about 95,000 people at the banking units covered by the labor talks. The three lenders raised pay for the first time in 19 years in 2014, a year after the Bank of Japan began its campaign of flooding the economy with cash to achieve 2 percent inflation. Yet that goal remains distant, with core consumer prices sliding 0.2 percent in December.
While the lenders are on course to achieve their combined profit goal of 2.15 trillion yen in the year ending March, the target is 5.2 percent lower than the previous fiscal year’s earnings. Combined net interest income fell 9.9 percent in the nine months ended December as lending margins shrank.
In contrast, unions at other companies are trying to push employers.
- Toyota Motor Corp.’s workers asked for a wage increase of 3,000 yen a month at their first round of meetings last week, labor union spokesman Kiyonori Fujita said Tuesday.
- Mitsubishi Heavy Industries Ltd.’s union sought a monthly rise of 4,000 yen, the machinery maker said Feb. 10.
- Hitachi Ltd. workers asked for 3,000 yen, company spokesman Yuichi Izumisama said.