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Japan – Salary outlook bleak compared with SE Asia

12 February 2014

With the notable exception of Japan, workers across south-east Asia can expect salary increases this year, according to an annual survey by recruitment firm Hays, of more than 2,600 employers in China, Hong Kong, Japan, Malaysia, and Singapore, reports businessweek.com.

“Asia remains a hotbed of recruitment activity and omnipresent high-level skills shortages are the continuous bane of hiring managers,” the Hays report stated.

In China, 12% of employers surveyed last year increased salaries by more than +10%, and another 54% of companies gave raises ranging between +6% and +10%. The Year of the Horse also looks to be a good year for workers, with Hays finding that 58% of Chinese employers surveyed expect to give raises of between +6% and +10%.

The one bleak spot in the region is Japan. Stagnant wage growth remains a problem for Prime Minister Shinzo Abe and his plan to revive the country’s economy. Base salaries (excluding overtime and bonuses) fell by -0.2% in December compared with last year, the nineteenth consecutive month of wage decline.

With prices already rising and a tax increase scheduled for April, consumers need to take home more money in order to feel comfortable spending. As a result, Mr Abe has been using his position to actively encourage Japanese companies to raise wages.

In an interview with Bloomberg News in December, Mr Abe stated that the government’s goal is: “Profits rise, then salaries rise, so consumption will increase, and again profits will rise. We get into a virtuous cycle. What we want is for wages to rise more than prices.”

Employers in Japan haven’t been too generous, though. According to the Hays survey, 16% of Japanese companies gave workers no raise last year, while the 64% that did increase salaries limited the raises to less than 3%. The outlook is similar this year, with 64% expecting raises of up to 3%, with 12% of employers surveyed saying they don’t expect to give raises at all.

Another of Mr Abe’s goals is to increase the role of women in the Japanese workforce. Japan ranked 105th among 136 countries in the World Economic Forum’s Global Gender Gap Report last year, and improving prospects for women who want to work is a vital component of Abenomics, the Prime Minister wrote in the Wall Street Journal last September.

By the time Tokyo hosts the Summer Olympic Games in 2020, he wants women to hold 30% of leadership positions in Japanese society.

Again, though, the Hays report shows just how much Japan lags behind the rest of the region. When asked the percentage of women in management positions, China did best with 36%, followed by Hong Kong at 33%, Malaysia at 29%, and Singapore at 27%. Japan was last, with women holding only 15% of management positions at the companies surveyed.

To read the full report, please click here

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