Japanese Gov't Warns Against Falling Wages

Japan’s ongoing economic improvement has raised corporate earnings but hasn’t translated into wage rises or cuts in work hours.

TOKYO (Kyodo) - The ongoing economic improvement has helped raise corporate earnings and payouts to shareholders but this has not translated into any significant wage rises or a cut in work hours, according to the annual white paper released by the Japanese labor ministry Friday.
The share of corporate earnings distributed as workers' wages and other personnel costs has to be increased instead of being reduced as is the case now if the current economic growth is to be sustained, the report concluded.
The findings by the Ministry of Health, Labor and Welfare noted an improvement in business performance on the whole as evidenced by the ratio of operating profit to sales, which is rising, particularly at large corporations.
The report also pointed out that larger slices of corporate profits are paid out as dividends to shareholders and as executives' salaries.
In contrast, labor's share of value added created by companies has been steadily contracting from 74.5 percent in 2001 and reached 71.4 percent in 2004, a quite low figure as compared with those commonly seen during past periods of economic upturns, according to the white paper.
The percentage in Japan used to be high by international standards but is now nearing those of other major industrial powers such as the United States and Britain.
Hourly manufacturing wages are lower in Japan than in other major industrialized countries although the depreciating effects of a weak yen need to be considered.
The report also pointed to a gaping income gap among workers hired under various terms of employment.
A majority of part-time workers including young people such as college students doing odd jobs, made 500,000-1,490,000 yen (US$4,200-12,500) in 2006. About 30 percent of contract workers such as those placed by temporary staffing agencies earned 2.00 million to 2.99 million yen (US$16,800-25,000), much lower than the annual salaries of permanent staff.
The white paper also recommended measures be taken to strike a better balance between work and workers' private lives in light of the need to improve productivity amid a decline in the nation's population and create more job opportunities.
Steps cited by the paper in this regard are a cut in the number of workers taking on excessive work loads and help for working women with young children.
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