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.