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Dismal Abenomics Leads To 16th Consecutive Decline In Japanese Wages

Tyler Durden's picture




 

If the "success" of Abenomics is measured by the soaring prices of food and energy, if little other inflation, by the exploding monetary base and by a wealth effect, pardon, stock market which has flatlined in the past 3 months, then it has so far done passable job of being considered good policy. If, however, one actually looks at the general improvement in living conditions measured most directly by that key metric -wages - then Abenomics has been the worst thing to hit Japan since the Fukushima tsunami, and an unmitigated disaster.

As the Japan labor ministry reported overnight, the nation's salaries extended the longest slide since 2010, as regular wages excluding overtime and bonuses fell 0.3 percent in
September from a year earlier, marking a 16th straight month of decline. That this is happening even as Prime Minister Shinzo Abe "urges companies to raise workers’ wages as part of his bid to reflate the world’s third-largest economy" is merely the latest slap in the face of central-planners everywhere who believe that flipping an economy and deeply engrained behaviors can happen on a dime.

More from Bloomberg:

The data underline the difficulties Abe faces in getting companies on board in his drive to end more than a decade of deflation among nascent signs of price gains after the Bank of Japan’s unprecedented easing. Trade unions are demanding higher base pay, and the question now is whether firms will agree in wage negotiations early next year.

 

“The key for the success of Abenomics is whether companies will raise wages,” Norio Miyagawa, a senior economist at Mizuho Securities Research and Consulting Co. in Tokyo, said before the report. “Companies still aren’t confident enough that growth will be sustained and will probably hesitate to raise wages, especially base salaries, for the time being.

 

Wages are falling behind price gains. National consumer prices excluding fresh food rose 0.7 percent last month from a year earlier, a fourth straight increase.

 

The nation’s economy is forecast to grow until April, when a sales-tax increase is likely to cause a one-quarter contraction. Domestic demand is boosting production, and a survey of purchasing managers released today showed manufacturers this month at their most confident in more than three years.

So Abe has another six months before the secular shift in fiscal policy makes wage growth virtually impossible.

Kaoru Yosano, a former finance minister, said in an interview this month that wage gains hinge on a pick-up in demand, not just pleas by Abe for companies to do their part for a recovery.

 

Trade union negotiations with management on salaries in talks known as “shunto,” or the spring wage offensive -- around March next year -- will be key for pay increases.

 

The negotiations “will be one clear point at which there is a chance to either show that something new is happening or raise further doubts,” Jerry Schiff, the International Monetary Fund’s mission chief for Japan, said in an interview this week in Tokyo. “It’ll be important to get wages to begin to rise soon.”

 

The Japanese Trade Union Confederation, or Rengo, plans to demand pay increases of more than 1 percent in next spring’s labor talks -- a move welcomed by Economy Minister Akira Amari.

Good luck with all that... especially following news that Japan's tobacco conglomerate, Japan Tobacco, is firing some 20% of jobs at the parent company and is closing 4 plants.

 

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Thu, 10/31/2013 - 08:28 | 4108132 slotmouth
slotmouth's picture

The next arrow will be to throw adult diapers from the helicopter.

Thu, 10/31/2013 - 08:30 | 4108134 GetZeeGold
GetZeeGold's picture

 

 

latest slap in the face of central-planners

 

Maybe we can beat the stupid out them. Worth a shot I suppose.

Thu, 10/31/2013 - 08:33 | 4108147 Zero Point
Zero Point's picture

It's funny. Japanese government ministers have that Japanese thing going, where you think they're smarter than the stupid fucks that run your country.

Turns out they're dumb fucks too.

Another nail in the coffin of my list of racial stereotypes.

Thu, 10/31/2013 - 10:19 | 4108455 asteroids
asteroids's picture

I wonder what Plan "B" is for the Japanese.

Thu, 10/31/2013 - 08:34 | 4108148 Its_the_economy...
Its_the_economy_stupid's picture

We are all so f--ked.

Thu, 10/31/2013 - 08:36 | 4108152 Its_the_economy...
Its_the_economy_stupid's picture

“The key for the success of Abenomics is whether companies will raise wages,"

 

that's right, blame it on failure to raise wages.

 

Duck and cover.

Thu, 10/31/2013 - 08:40 | 4108162 the not so migh...
the not so mighty maximiza's picture

fuck ya to raises!!!!!!

Thu, 10/31/2013 - 08:49 | 4108192 Eeyores Enigma
Eeyores Enigma's picture

So what do you call it when the price of everything rises on the fact that everyone has less money to spend?

Thu, 10/31/2013 - 08:53 | 4108207 NoDebt
NoDebt's picture

The beatings will continue.  Period.  Whether morale improves or not.

Thu, 10/31/2013 - 09:03 | 4108218 bubblemania
bubblemania's picture

Bullish!

Thu, 10/31/2013 - 09:05 | 4108229 suteibu
suteibu's picture

The good news - if you are drugged enough to believe it - is that there are even more people making less.  The government proudly claims that Japan's unemployment rate dropped from 4.1% to 4.0%. 

Like with just about everything the Japanese government does, the methods used to determine this combine complex algorithms, political and bureaucratic consensus, a little traditional Japanese folklore of the economic bent, a firm understanding that everyone believes that their own individual dire situation is an anomaly borne by their personal shortcomings and not the total incompetence of the corrupt government, a large dose of hubris, a heaping pile of still-warm bullshit, and a huge measure of 'because, Fuck You.' 

Americans who follow the Fukushima crisis...er...incident understand this.  Which is good because Obama has claimed these aspects of traditional Japanese governance as his own.  And you thought it was only Japan's "Lost Decades."

Thu, 10/31/2013 - 09:17 | 4108260 yogibear
yogibear's picture

Japan is the US Fed's twisted Keynesian experiment.  They'll see how long it continues until it implodes.  

Thu, 10/31/2013 - 09:52 | 4108350 whatthecurtains
whatthecurtains's picture

“The key for the success of Abenomics is whether companies will raise wages,”

 

Luckily inflation will be slow because of Abenomics... right?

Thu, 10/31/2013 - 11:13 | 4108604 Nue
Nue's picture

Of course when they do raise wages they'll have to raise prices, then they'll have to raise wages again, then they'll have to raise prices then the Government will slam down wage and price controls then the stagflation and the shortages hit. Oh what fun times the Japanese are in for.

Thu, 10/31/2013 - 11:29 | 4108638 GreatUncle
GreatUncle's picture

The article is a natural process in the Keyesian methodology the central bank so NOT SURPRISED.

1. Create a system of money creation where the top 1% can never lose out, these are the true idle people.

2. Play the inflate and deflate the debt away game result the wealth gap opens up between rich and poor.

3. Play it long enough the % of the total economic value the lower half has now fallen so low.

Now pump the system with QE, waste of time, gap between rich and poor widens and you make matters a whole lot worse because the economy cannot turn around when the 99% of the population have a FALLING OR ZERO % OF THE ECONOMY.

YOU JUST COULDNT MAKE THIS FUCKER UP! BUT IT GETS WORSE OH YES IT DOES!

The 1% dumbest people on the planet end up with all the wealth but do not know that having all this wealth now puts the OUTCOME OF THE ECONOMY FIRMLY IN THEIR HANDS. Ha, ha, fucking amazing.

Go on Mr Central Banker, go fix the shit you created. Cap the top, you might want to put in greater support levels for the bottom and close that spread in the economy.

WHY CAN'T THEY DO THIS? HERE IS WHY!

Clever little people not! That gap you can never close because it would generate deflation.

The current issue tracks all the way back to the creation and concept in point (1. sowed the seeds of own self destruction I do believe by ensuring that wealth can be accumulated bypassing the mechanism that is to be introduced. IT JUST TOOK DECADES TO RUN ITS COURSE.

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