TOKYO, March 15, 2024 (BSS/AFP) - The results of key wage hike negotiations
in Japan will be announced Friday, with a win for workers expected to set the
stage for a hotly anticipated shift away from the central bank's ultra-loose
monetary policy.

Wage growth has been sluggish in Japan for decades, and the government partly
blames this for the economy's woes.

But this year members of Japan's largest trade union, Rengo, have demanded
their highest average pay increase since 1994 in annual spring wage talks.

Rengo reports preliminary results of the bargaining later Friday, with hopes
high after major firms including Toyota and Panasonic ceded fully to their
workers' pay demands.

Its announcement will be closely watched by economists looking for signs that
the Bank of Japan could soon scale back its long-standing monetary easing
policies.
.

The bank's governor Kazuo Ueda has called the spring negotiations an
"important point" in deliberations over when and how to make the shift.

Central banks worldwide have raised interest rates in recent years to tackle
soaring inflation, but the BoJ is an outlier -- keeping in place its negative
interest rate and other measures designed to boost the stagnant economy.

Its decision to stick with these policies has sharply weakened the yen
against the dollar.

Even so, the bank has stressed that it needs to see a "virtuous cycle" of
rising wages and sustained, demand-driven inflation of two percent before
changing its ways.

The bank will announce its policy decision on Tuesday.

"Rengo's first tally of responses... should greatly encourage the Bank of
Japan to revise its policy at its March meeting," said BNP Paribas chief
economist Ryutaro Kono.

- 'Strong trend' -

This time last year Rengo announced an average pay rise of 3.8 percent, or
11,844 yen ($80) per month -- its best result since comparative figures
became available in 2013.

And this year, its members have called for an average hike of 5.85 percent.

Prime Minister Fumio Kishida has urged business leaders to raise wages faster
than inflation.

"I'm encouraged to see a strong trend of wage increases, even greater than
last year," he told a meeting of business and union leaders on Wednesday.

Nissan and Mitsubishi Heavy Industries are among the big Japanese companies
that have given unions everything they asked for this year.

Nippon Steel and Suzuki have even reportedly offered more than their unions
had demanded.

The wage negotiations are "looking promising" and Japan's "chronic labour
shortage supports the trend", said Nobuko Kobayashi, Asia-Pacific strategy
execution leader for consulting firm EY.

"Steady and sustained wage growth in tandem with inflation around two percent
year-on-year will signal Japan's exit from decades-long deflation," she told
AFP.

Japan narrowly avoided a technical recession in the second half of 2023, but
economists say the number-four economy remains in the doldrums.

National Australia Bank's Gavin Friend said on the NAB Morning Call podcast
Thursday that "everybody's now waiting" for the Bank of Japan to lift rates.

"Really, what the BoJ is looking for is a significant breach or move higher
than last year's first reading on the Rengo survey," he added.