In Japan, inflation reached 4%. It is a real trauma for the Japanese who have not experienced this for more than 40 years. The government is trying to induce companies to raise wages.
In every appearance on TV, Japanese Prime Minister Fumio Kishida implores companies to raise the salaries of their employees. And for good reason: if Japan lived for years either in deflation, that is to say that prices were falling, or with inflation close to zero, today inflation has reached 4%.
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Over the past year, the situation has changed and prices have risen a lot, especially for all the products that Japan has to import, since the Japanese currency, the yen, has lost a lot of its value. Prices are rising, but wages are still not moving and the purchasing power of families continues to decline. The government is now looking to force companies to make a move. But it’s still complicated.
As a result, the executive is flexing its muscles and is now threatening large corporations to apply the “shame strategy”, a denunciation tactic to somehow shame them and damage their reputation.
Sector-by-sector surveys from the Ministry of Industry
According to the Ministry of the Economy, the least generous companies in terms of salary increases are often SMEs. And particularly the subcontractors who supply the country’s large multinationals. These large groups have the means to put pressure on their suppliers and they often refuse the price increases demanded by SMEs.
SMEs are therefore trapped. They collect the increase in the price of raw materials or imported products, but they cannot pass them on to the price of their components. It is impossible for them to increase the salaries of their teams. The Ministry of Industry has therefore just launched surveys, sector by sector, with anonymous questionnaires that SMEs fill out.
The subcontractors say, each month, which are the multinationals which have shown themselves to be understanding and have accepted price increases. But they also give the names of the most stingy groups who refuse to take account of the situation. The ministry then publishes the results of these anonymous surveys online to point the finger at all the bad players.
This ineffective “strategy of shame” in 2014
Still, on this salary issue, the government seems a bit out of ideas. The Japanese executive has indeed already tried, without much success, political pressure or tax rebates for generous groups. No result. So he is now trying this “strategy of shame”… which he had already tried in 2014, without any real impact.
We will know the results of these various initiatives at the beginning of April after the major annual salary negotiations. For now, economists estimate that wage increases will be, on average, in the country, much lower than inflation.