Corporate executives and labor unions began this year’s spring wage negotiations on Tuesday, with the focus on whether companies will move toward hikes amid economic uncertainties caused by the coronavirus pandemic.
Masakazu Tokura, chairman of Japan’s most powerful business lobby known as Keidanren, urged companies to “respond proactively in consideration of social expectations,” siding with Prime Minister Fumio Kishida’s call for aggressive pay hikes by businesses.
“I believe it is extremely important for companies to fulfill their responsibility of working toward raising wages and improving working conditions by distributing their earnings and the outcome (of their performance),” Tokura, head of the Japan Business Federation, said at the opening of a management-labor union forum.
The shuntō wage talks began as Kishida, who took office in October last year, has called for pay hikes of over 3% by companies that have seen their earnings recover to pre-pandemic levels.
Under its guidelines for the wage talks released on Jan. 18, Keidanren called on companies with favorable earnings to increase base pay in addition to regular pay hikes, stipulating “It is desirable to bring wage hikes that are suitable for initiating a new type of capitalism” advocated by Kishida.
For companies not performing well, however, the lobby requested them to respond accordingly, saying “the top priority is continuing operations and maintaining employment,” as recovery from the COVID-19 pandemic remains uneven among different business sectors.
The Japanese Trade Union Confederation, the country’s biggest labor organization known as Rengo, meanwhile, is calling for a combined 4% pay hike — around 2% in basic pay in addition to a regular wage hike based on seniority.
Tomoko Yoshino, who became Rengo’s first female chief in October, told the forum in Tokyo that wage growth in Japan has been behind other major nations, while stressing the need to narrow gender disparities in terms of payment.
“I believe that a problem in Japan is that there was no redistribution (of wealth) even when there was growth,” she said at the forum, attended by corporate managers from major firms and labor union officials.
Since taking office, Kishida has placed priority on creating a new type of capitalism by ensuring both economic growth and wealth redistribution, aimed at expanding the country’s middle class. Accelerating wage growth is a key part of his agenda.
Wage growth remains sluggish in Japan even after rebounding from a recent low of 1.63% among major companies in 2003.
Major firms agreed to raise monthly wages by an average 1.86% after negotiations with respective labor unions in 2021, falling below 2% for the first time since 2013, according to data released by the Ministry of Health, Labor and Welfare in August.
“We expect (the wage talks) to quickly bring back the level of wage increases, which have been lower the past several years,” Chief Cabinet Secretary Hirokazu Matsuno told a news conference Tuesday.
Wage negotiations will get into full swing when labor unions present their requests around mid-February ahead of the new fiscal year, which begins in April.