The latest data compiled by Tokyo Shoko Research, a private firm, shows that average wages in the construction industry are now 16% higher than the salaries of banking and insurance staff, with the gulf widening as bankers
TOKYO: It’s not just Japanese banks that are feeling the squeeze from the Bank of Japan’s negative interest rates, their employees are too.
The latest data compiled by Tokyo Shoko Research, a private firm, shows that average wages in the construction industry are now 16% higher than the salaries of banking and insurance staff, with the gulf widening as bankers’ pay falls.
The average wage at 102 listed Japanese banks and insurance firms has edged down by 1.4% since 2016, when the BOJ introduced negative rates, making the industry the worst performer among 10 surveyed in a report released Monday.
Pay at all companies in the survey grew 2.9% over the same period.
The figures are another indication that pressure on bank profits partly attributable to the BOJ’s negative interest rate policy is forcing financial institutions to keep a tight lid on costs.
Putting more pressure on bank profitability is one reason why the central bank is reluctant to add to its already massive easing program unless absolutely necessary.
Profits at all sizes of banks from credit unions to the megabanks fell in the fiscal year ended in March, according to a BOJ report last week. Governor Haruhiko Kuroda has pledged to carefully monitor the side effects of easing on banks as he continues with stimulus to achieve a 2% inflation target.
While Kuroda has acknowledged that ultra-low rates are hurting profitability at commercial banks he has also flagged the impact of Japan’s aging and shrinking population and a decreasing number of regionally based companies on the profits of local banks in particular.
Average pay in the construction sector has increased 8.7% to 7.49 million yen ($69,461) since 2015 amid buoyant construction demand thanks to the Olympic games next year and rising number of foreign tourists, the report showed. - Bloomberg
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