Aurelia Butler

SEOUL (Reuters) -South Korea’s unemployment rate has fallen back to a record low, data showed on Wednesday, mainly due to increased employment among people aged 60 and over, and as shrinking exports and a sluggish housing market have yet to significantly hit payrolls.The unemployment rate was 2.6% in February versus 2.9% in January on a seasonally adjusted basis, matching a record low also touched in August, showed data from Statistics Korea.Economists said the data is one of the most time-lagging indicators.”Manufacturing and construction sectors, among others, will soon begin to show the effects of shrinking exports and a weakening housing market,” said Park Sang-hyun at HI Investment and Securities.People aged 60 or older contributed most to the declining unemployment rate with the figure in this age group falling to 1.6% from 2.6% a month earlier. The jobless rates for other age groups changed little, with some rising slightly.Exports fell in each of the past five months from a year earlier as the global economy slowed after a series of monetary tightening measures worldwide. More

TOKYO (Reuters) – Every March, management of major Japanese firms meet with unions for wage talks across industries that set the tone for employees’ pay in the new fiscal year.The precedent set at the “shunto” spring wage talks also influences wages at smaller firms that employ seven out of 10 Japanese workers.The outcome will have a huge influence on how soon the Bank of Japan (BOJ) can end ultra-low interest rates. Steady wage hikes are crucial to kick-starting domestic demand and keeping inflation sustainably around its 2% target.In Japan, with the economy entrenched in deflation for 15 years since the recession of the 1990s, people are unable to shake the perception that neither prices nor wages will rise. Here is an overview of the wage negotiations: and why they are important.HOW IS PAY DECIDED IN JAPAN?In around March of each year, companies and unions negotiate pay for the fiscal year beginning in April of that year.The practice, known as “shunto,” began in 1956 when Japan’s postwar economy was booming. Unions demanded improvement in wages and job conditions by resorting to strikes in big cities, which peaked in the 1960s to 1970s. The shunto wages eventually peaked in 1974 with a record 33% rise in pay. The increases fell below 3% after Japan slipped into deflation and prolonged economic stagnation in the late 1990s as it suffered its own banking crisis.Since then, unionists have turned cooperative, rather than combative, working with management on the shared objective of job security.The focus on job security, rather than higher pay, is blamed for keeping Japan’s wage growth stagnant. The share of low-paid part-timers in the workforce has also doubled since the early 1990s, and these so-called non-regular workers now account for nearly 40% of the workforce, putting a drag on pay increases.WHY ARE COMPANIES UNDER PRESSURE?The stimulus policies introduced by former Prime Minister Shinzo Abe dubbed “Abenomics” in the late 2010s helped boost exporters’ profits by weakening the yen. But it failed to trickle down to households in terms of wage increases.Incumbent premier Fumio Kishida wants to change this under his flagship “new capitalism” policies that seek to distribute wealth more broadly among the population through higher pay.He has called on companies to deliver wage hikes that exceed the pace of inflation and help households navigate higher costs from rising fuel and raw material prices.Companies themselves need to offer higher pay to retain talent and hire young workers as Japan’s rapidly ageing population intensifies a labour shortage.WHAT WILL BE THE OUTCOME OF THE WAGE TALKS?Some of Japan’s biggest firms have already promised large pay hikes including auto giant Toyota Motor (NYSE:TM) Corp and fashion brand Uniqlo parent Fast RetailingAnalysts expect big firms to offer wage hikes of around 3% in wage talks, which would be the fastest pace of increase since 1997 when Japan was on the cusp of deflation. That would follow last year’s 2.2% increase, the first hike in four years.Such increases would meet Kishida’s call for 3% rises but fall short of the ambitious 5% demanded by the Rengo labour umbrella group. WILL WAGES KEEP RISING?The key for the economy will be how much companies will raise base pay, which are across-the-board and permanent payments that provide the basis of future allowances like retirement and pensions.Wary of increasing fixed costs, many Japanese firms have long opted to pay one-off bonuses in good times rather than raise base pay.As Japan slid into deflation in the late 1990s, management and unions agreed for more than a decade to no increases in base pay.Economists projected a 2.85% wage increase in a January poll, with base pay increases accounting for 1.08% and 1.78% from an increase in additional salary, based on seniority.A survey by the Institute of Labour Administration, a labour think tank, which is known for its correlation with shunto results, showed a rise of 8,590 yen ($64.04), or 2.75%, for an average 439 workers surveyed. Asked whether they would carry out base pay increase, 41.6% said they intended to.Mizuho Research & Technologies economists foresee declines persisting until 2024 which will weigh on consumption.($1 = 134.1300 yen) More

TOKYO (Reuters) -Bank of Japan (BOJ) policymakers debated the feasibility of making further tweaks to its bond yield curve control with one member saying it must keep “various options in mind” on the future course of monetary policy, minutes of its January meeting showed on Wednesday.The nine-member board concluded that it was premature to exit ultra-loose monetary policy now with inflation yet to sustainably achieve the BOJ’s 2% target, according to the minutes of the Jan. 17-18 meeting.But many board members said distortions in the yield curve, caused in part by the BOJ’s aggressive bond buying to defend its yield cap, have yet to be fixed, the minutes showed, underlining their concern over the rising cost of prolonged monetary easing.”At some point in the future, the BOJ must conduct an examination of its policy to determine the balance of its benefits and cost. For now, however, it was appropriate to maintain monetary easing,” one member was quoted as saying.”The BOJ must keep various options in mind in guiding monetary policy. But with overseas economies slowing now, it’s inappropriate to rush towards an exit” from ultra-easy policy, another board member said, according to the minutes.At the January meeting, the BOJ maintained ultra-low rates, including a bond yield cap it was struggling to defend, defying market expectations it would phase out its massive stimulus programme amid mounting inflationary pressure. More

TOKYO (Reuters) – Big Japanese firms are set to offer the largest pay rises in a quarter century this year driven by inflation at 41-year high, in a sign that cash-rich firms may be warming to Prime Minister Fumio Kishida’s calls to boost consumption through higher wages.As annual labour talks dubbed “shunto”, Japanese for “spring offensive”, wrap up at many blue-chips on Wednesday, positive signs are emerging Japan Inc may be ready to boost wages to a level that can at least offset high living costs amid surging import inflation.Major firms are expected to raise wages by 2.85%, according to a survey of 33 economists taken by Japan Economic Research Center (JERC), far above last year’s 2.2% and the fastest gain since 1997 when Japan slid into 15 years of deflation.Given that consumer inflation, at 4.1%, outpace wage hikes, pay rises of 3% or more need to continue in the coming years to sustain price stability at 2%, said Hisashi Yamada, senior economist at Japan Research Institute.”Average wage hikes that are consistent with the central bank’s 2% price target are 3% which can be met this year albeit temporarily,” Yamada said.Takahide Kiuchi, a former Bank of Japan board member who is now executive economist at Nomura Research Institute, said base pay rises hold the key in determining how wages may affect prices.The JERC survey showed that excluding seniority-based pay, base compensation that boosts fixed labour costs accounts for just 1.08%.”We need to focus on base pay. It will likely be a little above 1%, still way lower than price increase,” Kiuchi said.Kishida’s government will likely hold a joint three-party meeting with labour and management for the first time in eight years on Wednesday to ensure structural wage hikes.FOLLOW THE PACE-SETTERThere are already some encouraging signs.Workers from Japan’s largest group of trade unions last week struck early agreements for hefty wage hikes. Other unions from Toyota , the world’s No. 1 automaker, and Honda, have also secured their biggest pay rises in decades.What’s unique about shunto in Japan is that every March, more than 300 major firms capitalised at 1 billion yen or more and with 1,000 or more workers, negotiate with their union following wages pace-setters such as Toyota Motor (NYSE:TM) Corp.Company unionists have historically tended to settle for relatively meagre pay hikes around 2% in recent years, as unions are inclined to cooperate with management in keeping job security rather than aggressively demanding pay rises.It remains unclear, however, whether the wave of wage hikes could spread to small firms, which employ seven out of 10 workers but struggle to pass on costs to their bigger clients at the end of supply chains.Some analysts are also sceptical that unions will be as aggressive in demanding higher pay in coming years if inflation eases, as it is expected to from the middle of the year.Real wages fell in January at the fastest pace since May 2014 when the sales tax was raised to 8% from 5%.Japan’s wages have grown just about 5% over the last 30 years, far below an average 35% gain among member countries during the same period, OECD data shows.(This story has been refiled to remove extraneous word in paragraph 2) More

The U.S. Justice Department is probing the sudden demise of the bank, which was shuttered on Friday following a bank run, the source said, declining to be named as the inquiry is not public. The Securities and Exchange Commission has launched a parallel investigation, according to the Wall Street Journal, which first reported the probes.Spokespeople for the SEC, SVB and the Justice Department declined to comment. The investigation is in early stages and may not result in allegations of wrongdoing or charges being filed, the source said. Officials are also examining stock sales by officers of SVB Financial Group, which owned the bank, the WSJ reported, citing people familiar with the matter.SEC Chair Gary Gensler on Sunday said in a statement the agency is particularly focused on monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors during periods of volatility.The rapid demise of Silicon Valley Bank and the fall of Signature Bank (NASDAQ:SBNY) have left regulators racing to contain risks to the rest of the sector. On Tuesday, ratings agency Moody’s (NYSE:MCO) cut its outlook on the U.S. banking system to “negative” from “stable.”SVB Financial Group and two top executives were sued this week by shareholders, who accused them of concealing how rising interest rates would leave its Silicon Valley Bank unit susceptible to a bank run. More