Trade unions across Japan’s financial sector are abandoning demands for wage rises this year in a sign that negative interest rates are having perverse and unintended consequences for the Bank of Japan.
For the first time in three years, workers at the country’s megabanks — Sumitomo Mitsui, Mizuho and Bank of Tokyo-Mitsubishi UFJ — are not requesting an increase in basic pay, according to union officials and local media.
The move highlights the growing scepticism in Europe and Asia about the fallout from central banks’ experiments with negative rates.
Researchers at the Bank for International Settlements this week warned of the “great uncertainty” surrounding the effects of prolonged negative rates on households and financial institutions. The deeper rates were taken into negative territory and the longer they stayed there, the greater the risk of the policy backfiring, they said.
With Japan’s financial sector employing hundreds of thousands of workers, the union move is a blow to the BoJ, which is relying on higher wages to boost consumption and drive inflation towards its 2 per cent goal.
The European Central Bank is expected to cut its deposit rate from minus 0.3 to minus 0.4 per cent tomorrow. It is considering a tiered system to shield banks from some of the costs, as in Japan, but this could blunt the effect of the policy.
The union decision in Japan demonstrates the risk that public unease about negative rates will offset some of the benefit to the country’s economy from lower borrowing costs and a weaker exchange rate.
“Negative rates are backfiring, in this sense,” said a senior trade union official. “Our real worry is that all their small business customers in the regions will use the example of the megabanks as an excuse to avoid wage hikes themselves.”
Negative rates have hit banks’ profits by narrowing the margin they can earn on lending. An official at one of the bank unions confirmed this was the reason for caution on wages, along with a general slowing of banking profits and low inflation — running at zero.
Unions at leading insurers such as Tokio Marine and Sompo Japan, which have also been hit by negative rates that make it harder to generate a return on their bond portfolios, have also decided not to request rises in basic pay.
工会官员和当地媒体表示，三井住友金融集团(Sumitomo Mitsui Financial Group)、瑞穗银行(Mitsui)和三菱东京日联银行(Bank of Tokyo-Mitsubishi UFJ)这几家大银行的员工三年来首次未要求提高基本工资。
国际清算银行(Bank for International Settlements)的研究人员本周警告说，长期负利率对家庭和金融机构的影响存在“很大不确定性”。他们表示，负利率的绝对值越大、持续时间越长，该政策弄巧成拙的风险就越大。
东京海上(Tokio Marine)和日本财产保险(Sompo Japan)等主要保险企业的工会也决定不要求提高基本工资。负利率使得这些企业的债券投资组合更难产生回报，因而对它们也造成了冲击。