Bank of Japan Chief Hopes Firms Will Hike Salaries

Bank of Japan Gov. Haruhiko Kuroda on Monday called on business leaders in one of the country’s key manufacturing hubs to raise wages and boost investment–moves the central bank sees as crucial for eradicating over 15 years of deflation.

“I am hoping that increases in basic salaries, including base-up, will be carried out as corporate earnings grow,” Mr. Kuroda said in a speech to business executives in Nagoya, central Japan.

In Japan, “base-up” refers to increases in base wage levels through management-labor negotiations in spring. Considering such a move as important for reversing chronic price falls, Prime Minister Shinzo Abe’s administration has been putting direct pressure on Japan’s corporate leaders through discussions by government representatives, labor lobbyists and business executives. In his speech to corporate leaders in early November in Osaka, Mr. Kuroda said the three-way talks would lead to wage increases, but he didn’t refer to base-up.

Mr. Kuroda also expressed hopes that companies will step up business investment, which economists say holds key to making Japan’s ongoing economic recovery sustainable.

“Once the economy emerges from deflation, things will be different,” Mr. Kuroda said. “You will find it more advantageous to spend money–rather than save it–in effective ways, such as capital expenditure, research and development, and hiring of human resources. I’d like you to see the changing environment as a business opportunity and engage in positive economic activities.”

Source: Marketwatch