The Economist Asia - 03.02.2018

24 Asia The EconomistFebruary 3rd 2018

1

E

IGHT years after Natsumi started work

at a printing company in Tokyo, her

monthly salary is only ¥15,000 ($138) more

than it was when she started. That equates

to a paltry rise of less than 1% a year. She

hopes that this year’s wage negotia-

tion—an annual rite between employers

and unions known as the shunto, or spring

offensive—will provide a bigger boost.

She may be in luck. Economists are pre-

dicting the highest rise since wages started

to inch up during the shuntoin 2014, reach-

ing 2.1% last year. (This figure includes regu-

lar wages, which are made up of “base

pay” and a seniority-based element that is

raised automatically, butexcludes bonuses

and overtime.) Asahi Group plans to raise

wages by 3.4% at its soft-drinksbusiness.

Ikinari! Steak, a restaurant chain, says it is

increasing the base wage alone by 5% for

all its 430 full-time employees. “The mo-

mentum is there this year,” says Takeshi Ni-

inami, the boss of Suntory, another drinks

firm, who also advises the government on

economic policy.

The relatively bullish outlook is based

in part on a tentative recovery. The econ-

omy has expanded for seven quarters in a

row. Prices of goods have edged up over

the past year. Bosses are starting to believe

that the country may be escaping deflation

for good. It helps that firms have been rak-

ing it in, too. Big businesses sit on hoards of

cash (see chart).

The second reason is structural. The

population is falling and getting older,

causing a dire shortage of labour. There are

now 1.59 jobs for every jobseeker, the high-

est level since 1974. Restaurants and con-

struction firms have to offer competitive

conditions if they want to find staff. Shinzo

Abe, the prime minister, haspledged to

lower the tax burden on firms that oblige.

Nonetheless, banks are forecasting an

average pay rise of only 2.3-2.5%. That will

be a disappointment to Mr Abe, who sees

lifting wages as the crux of his promise to

restore the economy to health. He has

called for a 3% increase this year—some-

thing Japanese workers have not received

for more than 20 years.

Many of the reasons wages have stag-

nated still apply. Part-timers, who tend to

be paid less, make up more than a third of

the workforce. Rigid labour law means em-

ployees do better by sticking with their

company rather than moving. This makes

workers less demanding, and bosses less

generous. Those who want to treat their

staff give chunky bonuses rather than rais-

ing monthly pay, a move which is nigh on

impossible to reverse.

The enthusiasticoutlook appears large-

ly confined to big businesses and the capi-

tal. Kazutaka Ishii, who heads a company

of 200 employees in Osaka, Japan’s sec-

ond city, says that for business-owners

there things are “so-so”. Individuals are not

feeling the economic uptick, either.

At any rate, increases in wages have not

yet translated into increases in consump-

tion and greater inflation. Some reckon

that will change if wages rise faster and

people gain confidence in the economy.

But a survey byREITI, a think-tank, sug-

gests the hurdle is even higher. Some 60%

of people in their 20s and 30s say they are

reluctant to spend because they are anx-

ious about having enough money in their

old age. Costly state pensions must be

trimmed, says Hideshi Nitta of Keidanren,

a powerful business lobby which backs Mr

Abe’s 3% target, to reassure young people

that the system will still be solvent when

they retire.

The reformers’ wish-list does not end

there. “Investing in education and training

are just asimportant as wages,” Mr Nii-

nami says. The government also hopes to

cap overtime, which might spur both hir-

ing and consumption. Higher pay, in other

words, is no cure-all. 7

Wages in Japan

Payday mender

TOKYO

The government’s drive for higher

wages is gathering steam

Money to earn

Sources: Haver Analytics;

Thomson Reuters

*Excluding financial

and insurance companies

Japan, Q1 2009=100

Corporate cash*

Average monthly earnings

2009 10 11 12 13 14 15 16 17

90

100

110

120

130

140

150

E

VEN before they enter the Asmoro bar, a

nightclub in central Jakarta, patrons can

hear the music. A regular beat—dang, dut,

dang, dut—spills out, only slightly muffled,

onto the street. Inside the smoky, dimly lit

space, women in tight mini-dresses and

teetering heels stand by a stage where nine

men play various instruments. Occasion-

ally one woman, known as a “waitress” al-

though she appears to do little waitressing,

breaks into song, usually accompanied by

one of the male visitors to the bar. At other

pointsthe women sway to the music as

customers slip them wads of cash, flashing

disco lights illuminating them momentari-

ly in the darkness.

On the other side of the city, around a

thousand people sit in a television studio

owned by Indosiar, a private TVstation.

They are there to watch the recording of

“Liga Dangdut”, a show that started on Jan-

uary 15th. It involves 170 contestants com-

peting to be the best dangdut singer. Male

and female performers in sequinned out-

fits or brightly coloured regional costumes

shiver backstage in the freezing air-condi-

tioning. They sing songs like those heard in

the bar, often in their local dialects, the

crowd whooping and swaying with them.

The show lasts forfive hours, and is broad-

cast almost every day. It will run until May.

Dangdut is Indonesia’s closest answer

to American country music, says Indra

Yudhistira of Indosiar. Younger singers

croon about heartbreak and romance. Old-

er ones warble about religion, alcoholism

and poverty. The music appeals particular-

ly to the rakyat, the people (as opposed to

the elite), especially in the countryside. As

with countrymusic, it isused by politi-

cians at rallies to drum up support from

Dangdut

The racket of the rakyat

JAKARTA

Indonesians love a raunchy genre of music, to the dismay of conservative Muslims

Not exactly poetic