Sunday, January 22, 2017
Most Japanese firms plan no wage hike; New robot revolution will take boss' jobs; A radical plan to defeat poverty
1 Most Japanese firms plan no wage hike (Straits Times) Nearly two-thirds of Japanese companies do not plan to hike their workers' wages this year, a Reuters poll showed, a blow to Prime Minister Shinzo Abe's campaign for higher pay to spur a recovery and a way to end two decades of deflation.
The survey also found that most wage gains over the past four years since Abe came to power have been minimal and that nearly one-quarter of firms have implemented none at all. In each of those four years, just before labour and management kick off their annual "shunto" talks Abe has urged companies to raise wages to boost households' purchasing power and stimulate spending.
But Japan Inc has generally resisted Abe's plea. Although the yen has weakened recently, many companies were hurt badly by last year's spike in the currency and are loath to commit to higher wages in the face of uncertainty amid threats about trade barriers by new US President Donald Trump.
As such, companies appear to opt to reward employees with one-off bonus payments after profits are secured, rather than promising a base pay raise. In Japan the base salary accounts for the bulk of monthly wages. Base pay rises had been virtually frozen for over a decade since the early 2000s, until Abe swept to power in late 2012 with a pledge to reboot the moribund economy.
2 New robot revolution will take boss’ jobs (Larry Elliott in The Guardian) Advances in artificial intelligence (AI) mean a second wave of change is approaching – and this time the jobs at risk from the machines are going to be jobs in the service sector.
As Dhaval Joshi, economist at BCA Research, has noted, it is not going to be the low-paid jobs in the service sector such as cleaning, gardening, carers, bar staff or cooks, whose jobs are most at risk. That’s because machines find it hard to replicate the movements of humans in everyday tasks.
The first army of machines wiped out well-paid jobs in manufacturing; the second army is about to wipe out well-paid jobs in the service sector. In many cases, the people who will be surplus to requirements will have spent many years in school and university building up their skills.
Humans are still more innovative and entrepreneurial than machines, which means there will be rich rewards for the creative. They will be few in number, however, so the dynamic of recent years – exceptionally high rewards for those at the top, a hollowing out of the middle class, and the expansion of low-paid insecure jobs at the bottom – will not just continue but become more pronounced.
This fourth industrial revolution, just like all the others, will lead to a growth spurt. But the last big epoch of technological change was accompanied by political change that ensured those making the cars, the washing machines and the TV sets could also buy them. Full employment policies, capital controls, progressive income tax and strong trade unions ensured this was the case.
3 A radical idea to defeat poverty (Simon Copland on BBC) This month Finland is embarking on a radical economic experiment. Its government is giving 2,000 people free money for two years, guaranteeing them a minimum income. The participants – selected at random from people receiving welfare – will each get 560 euros ($600) a month and they will continue to receive the money even if they get a job.
The Finnish trial is the largest of a number of experiments looking at what happens when you give every citizen a guaranteed income – a policy known as universal basic income. It’s a simple proposal, but a radical one. Some dislike the idea of governments handing out money indiscriminately. Others worry that guaranteed incomes could make it hard to find people willing to do necessary but unpopular jobs.
Yet the policy is gaining support around the world, from Silicon Valley to India. In the wake of the global financial crisis of 2008, many now see a universal basic income as the best way to reform struggling welfare systems, and to deal with the overwhelming economic challenges most countries are facing.
Influential 20th Century economists Milton Friedman and Friedrich Hayek both thought that some form of guaranteed income was the best way for governments to alleviate poverty. With social welfare coming under increasing financial and political pressure, some see basic income as an obvious solution. Providing a basic income can actually be cheaper than existing welfare systems, mainly because a uniform payment provided to all is cheaper to implement and monitor.
Yet many have returned to the idea today because they see a basic income as a way to buffer people from a global economy in flux. The shockwaves of the 2008 financial crisis still linger. But there are also growing fears about the threats posed by automation, as robotics and artificial intelligence move into workplaces.
Not everyone likes the idea, however. A referendum in Switzerland last year rejected a proposal to give 2,500 Swiss francs ($2,418) a month to every adult and a quarter of that amount to children. Those who opposed the plan argued that it would be unaffordable and would encourage people to drop out of work, especially those with low-paid manual jobs. Who would choose to be a cleaner or a rubbish collector if they did not have to?
But those in favour of basic income say it could force society to reassess the value of such roles and the rewards offered to those who do them. Indeed, a guaranteed income – even a supplementary one – could challenge the idea that people are only valuable members of society if they work.