It is important to extend pay increases to small and midsize companies and nonregular workers.
The annual shunto spring pay negotiations are getting into full swing. The labor-management talks will culminate on March 13, with employers scheduled to give their responses to pay increase requests on this date. The extent to which major companies plan to improve conditions will be key to the negotiations.
Since 2014, the government has taken the initiative to encourage management to increase pay in government-led spring labor negotiations, and pay increases have been realized at the 2 percent level every year. This year, the government has not announced a target figure, thus it can be said that the shunto talks have returned to their original format.
Optimism in the economic situation is not possible, making it more likely that the negotiations will be tough. The trend of pay increases must not be stopped.
The trade union of Toyota Motor Corp., a leading trendsetter of the baseline for shunto negotiations, has not disclosed its desired pay-scale increase -- which raises the level of base pay across the board. Instead, the Toyota union demanded a total monthly pay increase of 12,000, yen including a pay-scale increase and regular pay raise linked to years of employment.
In many small and midsize group companies, there are no regular pay increases. Therefore, even if workers of these group firms receive pay-scale raises larger than the increases given to Toyota employees, real pay increases for them are still far lower than that for Toyota workers. The Toyota union probably was concerned that pay gaps among Toyota group companies would not be corrected if the direction of the talks was focused too much on a pay-scale increase.
Many major trade unions have demanded pay-scale increases in the current negotiations. Close attention will be paid to how the Toyota union's move will influence the trend in this year's spring negotiations.
In order to bump up basic salaries across the board, it is necessary to narrow pay disparities between major companies and small and midsize firms. It is imperative to improve the profitability of small and midsize companies, which employ 70 percent of the nation's workforce.
There have been cases in which major clients rejected attempts by small and midsize firms to raise merchandise prices and delivery fees. The Japan Fair Trade Commission and the Small and Medium Enterprise Agency should reinforce the monitoring of such practices.
Include nonregular workers
It is also an important task to increase wages for nonregular workers. It may be advisable for management to give active consideration to the matter, including such measures as extending cash benefits to nonregular workers.
There are more than 20 million nonregular workers in Japan, accounting for 40 percent of the workforce. However, their average pay is only about 60 percent to 70 percent of what regular workers earn. If their standards of living improve, it will serve as a positive factor for consumption.
However, it is concerning that management has become more cautious toward raising pay, chiefly due to the impact of U.S.-China trade friction.
The Japan Business Federation (Keidanren) has taken a stance that employers should discuss pay increases based on annual earnings, including bonuses. This is because once pay-scale increases are carried out, it will be difficult for companies to reduce pay, resulting in an increase in costs.
However, there are fears that bonuses may be cut if business performance deteriorates. For this reason, it is ideal for companies to steadily carry out pay-scale increases so that workers can plan for the future with peace of mind.
Combined net profits of publicly listed companies will likely fall for the year ending in March 2019 for the first time in three years, but their profit levels remain high. Internal reserves have also been increasing. They can first improve their productivity through work style reforms and investment. Then, it is hoped that companies with brisk business performance will proceed with returning part of their profits to their workers.
(From The Yomiuri Shimbun, Feb. 24, 2019)
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